UNIT 5 - Chap 25: Statement of financial position Flashcards
What is the definition of SOFP?
the SOFP shows the value of a businesses assets and liabilities of a particular time
What are the 6 key parts of a SOFP? (6)
- Assets
- Non-current (fixed) assets
- Current assets
- Liabilities
- Current liabilities
- Non-current liabilities
Describe what non-current (fixed) assets are?
These are the items owned by the business for more than one year. E.g. Buildings, Vehicles, land, machinery
Describe what current assets are?
are items owned by a business and used within one year. E.g., stock, cash, and accounts receivables (debtor customers who owe money to the business)
Describe what assets are?
are those items of value which are owned by the business.
Describe what liabilities are?
are debts the business owes.
Describe what current liabilities are?
are short term debts owed by the business and are repaid in less than one year. E.g. bank overdraft and accounts payable/creditors-These are suppliers that are owed money by the business
Describe what non-current liabilities are?
are debts that do not have to be paid within one year. E.g. Mortgage/ long term bank loan
What is the formula for finding the amount of money going to shareholders?
Always to shareholders funds/equity = total assets – total liabilities
What is the total shareholders equity?
Total shareholder equity is the total sum of money invested into the business by the owners of the company
What are the 3 ways money can invested into the business by the owners of the company? (3)
it can be invested in 2 ways, number one share capital, number 2 retain profit, number 3 P & L
What is P & L?
profit reserved from the previous years profit and put back into the business aka retained profit
