Statment Of Financial Position Flashcards
What is statement of financial position
Shows the value of a business’s assets and liabilities at a particular time.
What are assets
Those items of value which are owned by the business.
Can be Current assets / non current assets
What are liabilities
Are debts owed by the business.
Can be non current liabilities / current liabilities.
What does the statement of financial position show us?
It shows how much wealth / equity the owners have invested in the business.
What is Owners equity
Owners equity/shareholders funds in a limited company :
Total assets - Total liabilities
Non current assets
Items owned by the business for more than one year
Current assets
Items owner by a business and used within one year
Non current liabilities
Long term debts owed by the business ; can be repaid over more than one year.
Current liabilities
Short term liabilities owed by the business ; have to be repaid in less than one year.
What is in a Statement of financial position
Assets : Current/non current
Liabilities : current/non current
Shareholders equity
Total shareholders equity
Working capital formula
Current assets - current liabilities
Capital employed formula
Shareholders funds + Non current liabilities
Ways in which shareholders invest their money
Share capital
Reservers arise
