Assets, liabilities and capital
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This document defines and categorizes assets, liabilities, and capital for businesses. Assets are property that can be converted to cash, including premises, land, equipment, and cash holdings. Assets are either tangible physical items or intangible non-physical items. They are also current assets meant to be converted to cash within a year, or fixed assets used longer-term. Liabilities are debts or obligations like loans, overdrafts, and expenses. Liabilities can be short-term obligations due in under a year, or long-term obligations due in over a year. Capital refers to the monetary resources owed to the business owner from starting funds, expansions, and retained profits.
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Balance Sheet
The Balance Sheet shows the financial condition of a business at a specific point of time categorizing financial sheet of the firm under two major heads “Equity & Liabilities” and “Assets”
The balance sheet is based on the fundamental equation:
Assets = Liabilities + Equity
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Equity & Liabilities represents what the firm owes, the burden or debt
The format prescribed in the Companies Act classifies Equity and Liabilities as follows: Shareholders’ Fund, Non-current Liabilities & Current Liabilities
Equity is a degree of ownership in any asset after deducting all the debts associated with that asset
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Liabilities are defined as a company's financial debts or obligations that arise during the course of business operations
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Current Liabilities are liabilities which are due to be settled within a year
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An asset is any resource owned by the business either tangible or intangible that produce value and is held by a company to for longer period of time to reap positive economic value for the business.
As per Companies act , under balance sheet asset is categorized under two main headings :- Current assets and Non- current assets.
Current asset is any asset which can reasonably be expected to get sold, consumed, or exhausted through the normal course of a business within the current fiscal year or operating cycle usually within one year
Current assets include current investments, inventories, trade receivables, cash& cash equivalents, short-term loans & advances
Non-current assets are company’s long-term investments usually in the form of investments made in property (land & building), plant and equipment, machinery, intangible assets like patents, copyright, trademark, goodwill etc.
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Topic 2 financial_20statement_1_
1. The financial statements document includes an income statement, balance sheet, and statement of cash flows. The income statement shows profitability over a period of time, the balance sheet outlines assets, liabilities, and equity at a point in time, and the statement of cash flows shows cash inflows and outflows.
2. The income statement displays revenue, expenses, and profit. The balance sheet lists current assets, fixed assets, liabilities, and equity. Current assets include cash, receivables, and inventory. Liabilities include current and long-term debt. Equity encompasses preferred stock and common stock.
3. Financial statements provide information about a company's performance and financial position to both internal and external
Topic 2 financial_20statement_1_
1. The financial statements document includes an income statement, balance sheet, and statement of cash flows. The income statement shows profitability over a period of time, the balance sheet outlines assets, liabilities, and equity at a point in time, and the statement of cash flows shows cash inflows and outflows.
2. The income statement displays revenue, expenses, and profit. The balance sheet lists current assets, fixed assets, liabilities, and equity. Current assets include cash, receivables, and inventory. Liabilities include current and long-term debt. Equity encompasses preferred stock and common stock.
3. Financial statements provide information about a company's performance and financial position to both internal and external
Balsheetguide
A balance sheet provides a snapshot of a business's financial position by listing assets, liabilities, and equity. Assets are things owned that have monetary value, including current assets like cash, accounts receivable, and inventory, as well as long-term assets like property, equipment, and investments. Liabilities are debts owed, including current liabilities payable within a year like accounts payable and taxes, as well as long-term notes. Equity represents the owner's claim and must equal total assets minus total liabilities to balance.
sources_of_business_finance.pptx
The document discusses various sources of business finance including internal sources like retained earnings and equity share capital, and external sources like debentures, term loans, public deposits, commercial banks, lease financing, and special financial institutions. It provides details on each source like their key features, terms, and advantages. Statistical data is also presented on the sources of finance most commonly used. The document aims to provide a comprehensive overview of the different avenues available for businesses to raise funds.
Topic 2 2_ (2) finance
The document discusses the needs and purposes of key financial statements including the income statement, balance sheet, and statement of cash flows. It explains the components and calculations of these statements. It also describes common financial ratios used in analysis of statements, such as liquidity, profitability, asset management, and leverage ratios. These ratios are used to evaluate a firm's performance and financial position over time and in comparison to other companies.
Understanding the Balance Sheet.
This document provides an overview of accounting concepts related to balance sheets, including definitions and explanations of key items that appear on a balance sheet. It begins with an introduction to balance sheets and how they show a business's assets and liabilities at a point in time. It then defines and explains common items that make up sources of funds (equity and liabilities), applications of funds (assets), as well as other accounting concepts like provisions, receivables, payables, and work-in-progress. The document aims to help readers understand the key components of a balance sheet and their meanings.
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Assets, liabilities and capital
- 1. Assets, Liabilities and Capital By Bweendo Jane Lecturer Zambia College of Distance Education
- 2. Assets Assets refer to property owned by a business that can be converted into cash. Examples include: Premises Land and buildings Fixtures and fittings Motor vehicles Furniture Cash at bank Prepaid expenses etc.
- 4. Tangible and Intangible Assets Tangible assets are physical property owned by the business. Intangible assets are assets that cannot be seen and touched; they are non-physical assets.
- 5. Current Assets Current assets are physical property of the business that can quickly be converted into cash within a period of less than one year.
- 6. Fixed Assets Physical property of the business kept in the business for a longer period and cannot be quickly converted into cash. Features of fixed assets: used in the business to generate revenue last for at least more than one year Bought specifically for use and not for resale.
- 7. Liabilities Liabilities refer to debts or obligations that arise in the course of doing business. Examples of liabilities include: Loan (money borrowed) Bank overdrafts Creditors (accounts payable) Mortgage Accrued or outstanding expenses
- 8. Types of Liabilities Liabilities can either be short-term or long-term. Short-term liabilities These are debts or obligations payable within a period of less than one year. Examples are: Short-term loans Bank overdrafts Creditors (accounts payable) Accrued or outstanding expenses – expenses due but not yet paid
- 9. Long-Term Liabilities These are debts or obligations payable in a period of more than one year. Examples are: Long-Term loans Mortgages etc.
- 10. Capital or Equity Capital or equity refers to the amount of resources the business owes its owner. This includes; the amount of money used to start, the amount used to expand the business the profits not take out of the business. Capital is often described as the liability of the business to its owner.
- 11. Summary Assets refer to the property owned by a business Liabilities are debts or obligations that arise in the course of doing business. Capital the amount of resources the business owes its owner
- 12. End! Thank you