The Balance Sheet - Net Assets Flashcards Preview

Business - Unit 2 - Finance > The Balance Sheet - Net Assets > Flashcards

Flashcards in The Balance Sheet - Net Assets Deck (10):
1

What is A Balance Sheet?

Tells you what the business has done with the money its got.
It Records where the business got its money from & what it has done with it

2

When is it calculated?

A particular date, usually the last day of the companies financial year

3

What are the parts to a balance sheet?

- Fixed Assets
- Current Assets
- Current Liabilities
- Net Current Assets

4

What are Fixed Assets?

They last more than a year:
- Premises
- Machinery
- Vehicles etc

5

What are Current Assets?

Listed in increased order of liquidity:
-Stock (Inc raw materials & finished products not yet sold)
- Debtors - Value of products sold.
- Cash (sitting in the bank unspent)

6

What are Debtors?

Customers that have bought on credit, so products sold but not been paid for yet.
Basically the firm is lending money to customers so they can buy the products

7

Explain "Current Liabilities"

The Bills the firm has to pay soon:
- Any payments that must be paid within a year of date on balance sheet
- Unpaid corporation TAX, payable out of the previous year's profits
- Unpaid dividends to shareholders
This is money that doesn't really belong to the firm so you take it away from the current assets figure

8

Explain "Net Current Assets"

Current Assets - Current liabilities = Net Current Assets
Also called working capital

9

What are Net Assets?

Also called Net Worth - this is the amount the firm would make if it sold all its assets - in theory it's what the firm is worth

10

How do you work out Net Assets?

Add Net Current Assets to the Fixed Assets