The statement of financial position Flashcards
(14 cards)
Assets are defined as
resources a business has and can be used for future economic benefit
Non-current assets (depreciated) and are
typically owned for longer than a year
Current assets (not depreciated) are
typically owned for less than a year
Non-current assets (depreciated) examples;
land, buildings, motor vehicles, plant and machinery
Current assets (not depreciated) examples;
cash in hand, trade receivables, inventory (stock)
Liabilities are defined as
obligations to transfer money or economic resources to a third party
Non current liabilities are
paid after 12 months
A bank loan is a
non-current liability
Current liabilities are
settled by the company in less than one year
Bank overdraft, trade payables and tax liabilities are examples of
current liabilities
Equity is
money the company’s owners have (re) invested in a business
Ordinary share is
money raised by selling shares to ordinary share holders
Retained earnings are
profits the company has earned, re-invested by shareholders
A company’s Total Assets must be
Equities + Liabailities
