Balance Sheet Flashcards
What is an Asset?
- Controlled by the entity
- As a result of past events
- Future economic benefits expected
(Resources with future economic value)
Current Assets
Held for sale/consumption during business’s operating cycle
Expected to be sold within the next year
Held principally for trading
Cash or near cash
Non current assets
Doesn’t meet definition of current
Long term, More than a year
Features of non-current assets
Not purchased for resale
Retained for more than year
Not for reselling in near future
Held for long term use in business to produce goods/services
Current Assets Examples
Inventory
Receivables
Cash and equivalents
What is inventory?
Stock of goods for production or resale, a store of potential cash
What are Receivables
Amounts owed by outside parties tot eh business for goods supplied on credit
Right to receive cash in the near future
What are cash and cash equivalents
Cash in hand, money in bank accounts or on deposit
Examples of Non-current assets
Intangible assets
Tangible assets
Investments
What are intangible assets?
No material substance.
Examples: goodwill, patents, trademarks, intellectual property rights
What are tangible assets?
Property, plant and equipment.
Examples: buildings, vehicles, machinery, computers, fixtures and fittings
What are investments?
Shares or other financial assets (such as loans) in other business entities
Distinction between current and non-current assets?
Time
Non-current: benefits over more than a year
Current: held for a short time to generate cash
Liabilities definition
A present obligation of an entity
Arising from past events
Settlement of which is expected to result in an outflow from the entity of rescues embodying economic befnefits
(Claims of others e.g. bank/suppliers)
Equity Defintion
Claims of owners (shareholders)
