Balance Sheets Flashcards
(24 cards)
What is the definition of a balance sheet
It shows the financial position at a point in time
How does a balance sheet help a business
It show the business how much they are worth and what they own and also what they owe to others
Heat does the tip half of a balance sheet show
What the business is doing with its money
What does the bottom half of a balance sheet show
Where the bussiness got its money from
What is the definition of assets
Anything Owned by the business
What is a fixed asset
Assets that will last for MORE THAN ONE YEAR.
Give an example of fixed asset
Equipment
Machinery
Property
Fixtures and fittings
Vehicles
What is a current asset
Assets that are owned by a business and will be USED WITHIN ONE YEAR
Give an example of a current asset
Stock
People who owe the business money
Cash in the bank
What is a depreciation
The loss in a valued of an asset over time
What two elements must balance on the balance sheet
Net assets and capital employed
What are current liabilities
Long term debts which the company owes TO BE PAID AFTER ONE YEAR
Give an example of a current liability
Creditors ( people of other business that the business owes money to )
Eg suppliers , overdraft
What are long term liabilities
Long term debts which the company owes
TO BE OAID AFTER ONE YEAR
Give an example of a long term liability
Bank loans
Mortgage
What is the definition of working Capital
The amount of capital / money available to pay for the day to day of the business
What is a working capital also known as
Net current assets
How do u calculate working capital
Current assets - current liabilities
What does it mean if the Business has good working capital
The business can cover its costs and survive in a crises
What does it mean if the business has bad working capital
The business can’t pay day to day expenses and may get into financial difficulties
How do u calculate net assets
Net current assets + fixed assets
Or
Net current assets - non current liabilities
What is the definition of capital employed
This the long term and permanent capital of the business ( capital is the money invested in the business to generate revenue )
Give an example of an internal source of capital
Cash help by the business , retained profits , owners funds
Give and expand of an external source of capital
Mortgage , bank loan , leasing , investors a , shareholders , hire Bouchard , grands , overdraft , credit cards
