Balance sheet

Created by

saffa muneer

Cards (6)

what is a balance sheet?
a financial snapshot of the business at a moment of time
key theory
it looks at the accumulated wealth of a business and can show its overall worth
it lists what the business owns and what it owes
it shows the total equity provided by the owners
equity comes from either the purchase of shares or through retained profit known as reserves
key terms for balance sheet
assets - items that the business owns
non-current assets - resources that can be used repeatedly in the production process and allow a business to operate
tangible assets - non-current assets that exist physically
intangible assets - non-current assets that do not have physical presence
key terms for balance sheet
current assets - short term items that turn into cash within a year
inventories - stock, work in progress, finished goods
recievables - money owed to the company by its customers mostly from sales on credit
liabilities - debts owed by the business
non-current liabilities - debts due for repayment after more than a year
current liabilities - debts due for repayment within one year
key terms for balance sheet
total equity - funds provided by shareholders to set up the business, fund expansion and purchase non-current assets : 2 forms are share capital and reserves and retained earnings
share capital - funds provided by shareholders through the purchase of shares
reserves - profits reinvested into the business that has not been paid to shareholders as dividends
key calculations
net current assets = current assets - current liabilities
net assets = total assets - total liabilities
capital employed = total equity + non-current liabilities