The Balance sheet

Question 1

What is statement of financial position?

Answer 1

Shows the wealth accumulated at the end of the year.

Question 2

Current assets and Non-current assets

Answer 2

current assets held in short term -inventories, cash

non current held in long term - property, plant, equipment

Question 3

Characteristics for current liabilities

Answer 3

held for trade for 12 months

short term loans, trade creditors, overdrafts

Question 4

Non current liabilities

Answer 4

held for more than a year

i.e long term loans and long term creditors

Question 5

Assets formula

Answer 5

Assets = equity + liabilities.

Question 6

Uses of statement of financial position

Answer 6

Performance can be assessed
shows how business is financed and how funds are deployed
provides a basis for assessing value of business