Finance - Financial Statements Flashcards
1
Q
Users of financial statements and purpose of use
A
- owners, to assess profits and inform decision-making
- employees, to ensure jobs are secure
- HMRC, to ensure business paying correct tax
- trade unions, to assess if members due pay rise
2
Q
Working equity
A
- ability to pay short term debts
- calculated by current assets - current liabilities
3
Q
Net assets employed
A
value of non current assets + working equity
4
Q
Net assets
A
- overall value of business
- net assets employed - non-current liabilities
5
Q
Equity and reserves
A
- shows how the business has been financed
- should add up to total net assets
6
Q
Purpose of statement of financial position
A
- legal requirement
- compare with previous years/competitors
- shows working equity figure
- state value/net assets of organisation
