Unit 5: Chapter 25 Flashcards
Statement of financial position
What is a statement of financial position?
shows the value of a business’ assets and liabilities at a particular time (aka balance sheet)
What is an asset?
things that the business owns
What are the two types of assets?
non-current assets: can be used for more than a year
current assets: used up under a year
What are the 3 current assets?
cash, inventory, debtors
What are liabilities?
things that the business owes
What are the two types of liabilities?
non-current liabilities: paid back after a year
current liabilities: pay back within a year
What is the formula for net assets?
total assets - total liabilities
What is net profit?
same as owners equity or total shareholder funds/equity
gross profit - expenses
What are shareholder funds/equity?
statement which shows the owners wealth and what they have invested into the business
share capital and retained profits
total share of capital and reserves
What is share capital?
money put into business when shareholders buy newly issued shares
What are reserves?
What is the formula for working capital?
current assets - current liabilities
What is working capital?
the amount of money the business has to run on a day to day basis
