well you know and understand each Key Term. q I know and understand this Key Term. q I am still a bit uncertain about what this Key Term means. q I don’t understand this Key Term yet. When you revise each chapter, tick the boxes again to indicate how much you have learned.
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A statement of financial position shows the value of all the assets owned by the business and all the liabilities it owes other people. Also commonly known as a balance sheet, it is a statement of the wealth of a business on a particular date.
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Assets are things of value that the business owns. There are two types of assets: fixed and current.
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Fixed assets are things such as land, premises, machinery or motor vehicles that stay in the business for longer than one year. They are called fixed because they do not fluctuate or change in value in the short term.
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Liabilities are anything that the business owes. There are two types of liabilities: current and long-term.
Long-term liabilities refer to the money owed by a business that must be repaid over a longer period.
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Current assets are items such as stock, bank accounts and debtors, which will usually change in value during the year. q q q
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Current liabilities are debts owed by the firm that must be paid within one year and usually a lot sooner than that. q q q
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Working capital refers to the difference between current assets and current liabilities. This is the amount of money available to a business to pay its normal daily transactions. q q q
Issued share capital is the amount of money owed to the shareholders if the company closes down.
Capital employed is the total amount of finance invested in the business.
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Retained earnings is the amount of profit kept in the business. It is also known as reserves or the closing profit and loss balance. q q q
