Chapter Four Flashcards
What is the statement of financial position
A snapshot of the business at one point…it shows the business assets and liability
What is an asset
Something the business owns
What is a liability
Something the business owes
What is capital
The amount invested by the owner in the busines s
What are non current assets
Assets the business will hold for more than a year
What is a current asset
Something the business holds for less than a year
Example of non current liability
Bank loan
What is a current liability
Loan to be paid within the year
What is the capital section made up of
Cash injected by owner plus profit the business has made
What is the accounting equation
Assets - liabilities = capital
What is a statement of profit and loss
A summary of trading activities over a given period, usually a year
What is the cost of goods sold section in a profit and loss statement
Opening inventory (list of goods not sold in last period)
Purchases (goods brought to sell during this period)
Closing inventory (goods brought in this period but not sold)
What sections make up a profit and loss statement
Less cost of goods sold
Gross profit
Expenses
Profit
What is the gross profit in the profit and loss statement
The profit the business has made from trading
What makes up the gross profit in the profit and loss statement
Sundry expenses
Discounts recieved
