Topic Four, Part 9 - Statement of Financial Position Flashcards
What is a statement of financial position?
A statement about business value at any given time
What does a statement of financial position show?
- assets
- liabilities
What are current liabilities?
less than one year
What are non-current liabilities?
money owed for more than one year
What is liquidity?
the ability to convert assets into cash
What are non-current fixed assets?
Cannot be converted quickly into cash e.g. land, buildings
What are tangible assets?
Assets that can be seen-factory and machine
What are Intangible assets?
Assets that are not visible e.g. patent
What is goodwill?
An intangible asset associated with the company’s reputation
What are patents?
A government licence allowing a right for a set period
What order are currents assets listed in?
- Inventories
- debtors
- cash
What are inventories?
Stock e.g. materials, finished and unfinished goods
What is included in the Trade and other receivables category?
Money owed to the business
What is bad debt?
When debtors wont pay
How is allowance method calculated for estimating bad debt? ///
Taking the figure as a percentage of the receivables.
What is the ageing method for estimating bad debt?
Longer a debt isn’t payed, the more likely it wont ever be paid
What is credit sales for estimating bad debt?
- Using a businesses historical records to assess the likelihood of bad debts
- Work out the % of bad debt for total sales or credit sales.
What are liabilities?
What a business owes
What is the formula for net assets?
(Value of current assets + non-current assets) -
non-current liabilities.
What is shareholders equity?
The value of funds tied up in the business, as shares and retained profits.
What are ordinary shares?
- Show an ownership of the business
- Each share allows a vote at the business AGM
What are preference shares?
A share which entitles the holder to a fixed dividend
What are retained earnings?
The money retained in the business in order to help it grow
