lecture 1 - balance sheet

Question 1

define a baalnce sheet

Answer 1

itemised statement of what a company owns , owes, is owed and is worth

Question 2

a balance sheet is compose of

Answer 2

assets, liabilities and equity

Question 3

what is an asset

Answer 3

what one owns

Question 4

what is a liability

Answer 4

what the company owes, how much and to whom

Question 5

what does non current mean

Answer 5

long term

owned/owed for more than a year

Question 6

what does current mean

Answer 6

short term

own/owed for less than a year

Question 7

a computer is a long term asset most of the time but if the company intends to use it for only 1 year what is it

Answer 7

current asset

Question 8

what is the useful life

Answer 8

how long a company intends to use an asset for

number of years it is likely to remain in service for the purpose of cost-effective revenue generation

Question 9

how could a company owe the government

Answer 9

not having paid appropriate tax

Question 10

in terms of liablities - whether something is short term or long term depends on

Answer 10

when they gotta pay the money back

Question 11

asset big definiton

Answer 11

Resource controlled by the entity as a result of past events which will yield future economic benefits

Question 12

how are assets presented in the financial statement

Answer 12

according to the length of time entity expects to hold and use them

Question 13

non current aset

Answer 13

entity expectws to use for periods that extend beyonf one year

Question 14

current asset

Answer 14

Cash and other assets that the entity expects to turn to cash within one year (usually in the course of normal operations

Question 15

what are the 2 types of non current assets

Answer 15

intangible asset

tangible asset

Question 16

what is a tangible asset and what are they also known as

Answer 16

can be seen and touched e.g property, computer
aka fixed assets

Question 17

what are intagible assets

Answer 17

-not physical in nature , you can’t see or touch but it’s got value e e.g reputation of the bs (good will) intelleectual property rights such as patent ,

Question 18

what are the 4 examples of current assets

Answer 18

cash
inventory
trade recievables
prepayment

Question 19

cash includes

Answer 19

bank deposits

Question 20

inventory is known as

Answer 20

stock / closing stock value

Question 21

what is inventory

Answer 21

total value of unsold products at the end of the year . Good purchased or internally produced for purpose of resale or for manufacture of other goods , but not yet sold

Question 22

trade recievables aka

Answer 22

trade debtors

Question 23

what are trade recievables

Answer 23

money owed to customers who have bought on credit

Question 24

what is prepatment

Answer 24

company makes an expense in advance e.g renting a factory and paying rent 1 year in advance

Question 25

big definition of liability

Answer 25

A present obligation of an entity arising from past events , the settlement of which is expected to result in an outflow of resources that embody economic benefit

Question 26

what happens if you cant pay a liablity back

Answer 26

go bankrupt

Question 27

non current liability

Answer 27

entity expects to settle in periods that extend beyond one year #- mortgage on property

Question 28

what is a current liablity

Answer 28

entity expects to pay it within one year

Question 29

give example of current liablities

Answer 29

overdraft/short term borrowing trade payable accrual

Question 30

trade payable aka

Answer 30

creditor

Question 31

what is a trade payable

Answer 31

money owed to supplier who provided goods on creditha

Question 32

what is an accrual

Answer 32

opposite of prepatment you owe money for an expense you should pay ( we cover later )

Question 33

equity aka

Answer 33

capital

Question 34

what is equity

Answer 34

amount of capital invested in the business by its owners ( net of withdrawals ) + retained profit

Question 35

equity is a notional amount that can be interpreted as

Answer 35

net investment of the owners

Question 36

if company is doing well the investment value

Answer 36

increases

Question 37

what does the equity section show

Answer 37

value of a company

Question 38

when looking at a balance sheet what should you always do

Answer 38

check the currency and whether the money is in Ks or millions