Statement of Financial Position Flashcards
What does the SoFP measure?
Wealth accumulated at the end of the year.
How much time is the accounting period?
12 Months.
What are Assets?
Resources held by the business.
Assets Characteristics
-They must be an economic resource.
-They must be under the control of the business.
They must be able to be measured in monetary terms.
What are Current Assets and what are their characteristics?
Assets held for the short term.
-They are held for trading.
-They are cash or near cash.
-They are expected to be sold within a year after the -
date in the SoFP.
-They are held for sale or consumption.
What are Non-Current Assets and what are their characteristics?
Assets that are not Current. Used for long term operations.
Most common Current Assets
Inventory, Trade Receivables and Cash
Most common Non-Current Assets
Property, Plant and Equipment
What are Claims?
An obligation of the business to provide cash or benefits to a third party.
What is Equity?
Claims of the owners against the business.
What is Liabilities?
Claims of other parties.
What is the Accounting Equation (Extended)?
Assets = Equity
+ (Sales Revenue - Expenses)
+ Liabilities
What are Trade Receivables and where are they in the SoFP?
Money owed to the business by its clients.
Assets.
What are Trade Payables and where are they in the SoFP?
Money the business owes to its suppliers.
Liabilities.
