Balance Sheet Flashcards
What does the Balance sheet do?
It records the business’s assets and liabilities at a point in time.
What is it called a Balance sheet?
This is because the total value of the assets is always the same as the total value for the liabilities.
What are the assets?
The assets are anything owned by the business such as equipment, stock and furniture.
What are the liabilities?
The liabilites are any debts the business may have.
What will the balance sheet record?
It will record: Fixed assets Current assets Current liabilities Long-term liabilities Capital and Net assets
What is Fixed assets?
Items the business needs and will probably keep for some time, such as buildings, fixtures and fittings.
What is Current assets?
Items that can be quickly turned into money, such as stock or money owed by customers.
What is Current liabilities?
Money owed by the business that must be paid back within year, such as suppliers, short-term loans and overdrafts.
What is Long-term liabilites?
Money owed for more than a year, such as a mortgage or large bank loan.
What is Capital?
How the business activities are funded. The money can come from internal sources oe external sources.
What is Net assets?
The balance sheet will show how the business is using the money invested by the owners.
What is the formula for calculating the Working capital?
Working capital = Current assets - Current liabilities
