statement of financial position (balance sheet)

Question 1

what is a balance sheet?

Answer 1

a balance sheet is a snapshot of one day
- shows the value of the business; owes and owns
- assets = equity (liabilities + capital)

Question 2

key points

Answer 2

• assets
• non-current (fixed) assets= buildings, machinery, things used over and over again over a period of time, not expected to be sold within 12 months
• CURRENT ASSETS = are used up in production e.g. stock, raw materials or debtors, liquid assets are cash
• LIABILITIES = are the debts of the business = current (overdraft, trade creditors) non current (mortgage/loans)

Question 3

stakeholder interest

Answer 3

• GOVERNMENTS = will use the financial info to calculate the amount of tax a business has to pay
• SHAREHOLDERS = analyse the accounts and decide whether their investment is being used effectively
• SENIOR MANAGERS = use accounts to assist their medium and long-term planning
• POTENTIAL INVESTORS