The classified balance sheet Flashcards
What are the possible effect of transactions on Balance Sheet items
the account can increase or decrease
Explain the concept of a Balance Sheet
A balance sheet is a financial statement that shows the financial position of a business
Identify the components of a Balance Sheet
Assets, Capital and Liabilities of a firm
Balance Sheet/Accounting equation
Assets = Capital + Liabilities
Types of assets
Non current and current
Types of liabilities
Non current liabilities and current liabilities
Arrangement of Non current Assets in order of permanence and liquidity
fixed assets in balance sheet most permanence to least permanence
Arrangement of current Assets in order of permanence and liquidity
Least liquid to most liquid
What is working capital
Money used in business on a day-to-day basics and
it is calculated using current asset - current liabilities
How is total net fixed assets or closing capital calculated
working capital +fixed asset
Debtors
We owe them
Creditors
They owe us
Remember the format
The title - the name of the business, statement of financial position as at the date
Fixed assets
Current asset
less current liabilities from current assets to get
Working capital
Total net fixed asset- working capital + fixed assets
Financed by- capital add net profit
Less drawings
