Statement of Financial Position/Balance Sheet

Question 1

Balance Sheet/Statement of Financial Position

Answer 1

Shows the financial structure of a business at a specific point in time by identifying its assets, liabilities and capital

Question 2

For a balance sheet to balance, total assets should = ?

Answer 2

total liabilities + equity

Question 3

Non-Current Assets

Answer 3

Items that are long-term/take more than 12 months to sell (e.g. machinery, buildings and vehicles)

Question 4

Current Asssets

Answer 4

Items that can be converted into cash quickly (within 12 months) (e.g. cash, debtors & stock)

Question 5

Current Liabilities

Answer 5

Money owed by a business that needs to be repaid within 12 months (e.g. overdrafts, creditors)

Question 6

Non-current Liabilities

Answer 6

Money owed by a business that do not need to be repaid back for at least 12 months (e.g. bank loans & mortgages)

Question 7

Net Assets Formula

Answer 7

Net Assets = Total Assets - Total Liabilities

Question 8

Equity

Answer 8

Shows how the net assets of a business are funded. For example, share capital and retained earnings

Question 9

Total Equity can also be known as

Answer 9

Capital Employed

Question 10

How to create a balance sheet?

Answer 10

1. Write the title (“Balance Sheet - Company - Date)
2. You’re going to have 2 columns
3. on the left column you have:

Each place marked with (sec) means title, list, and total

• Non-current assets (sec)
• Current assets (sec)
• Total assets
• Current liabilities (sec)
• Non-current liabilities (sec)
• Total Liabilities
• Net assets
• Equity (sec)

Question 11

Working Capital

Answer 11

A metric for businesses to measure their liquidity. It is the difference between current assets and current liabilities.