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
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2
Q

Working equity

A
  • ability to pay short term debts

- calculated by current assets - current liabilities

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3
Q

Net assets employed

A

value of non current assets + working equity

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4
Q

Net assets

A
  • overall value of business

- net assets employed - non-current liabilities

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5
Q

Equity and reserves

A
  • shows how the business has been financed

- should add up to total net assets

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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
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