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Balance Sheet
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A Balance Sheet Is a statement of a firms assets,
liabilities and share capital on a particular date.
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Assets Are things that a firm owns. They can be current or fixed.
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Current Assets Are owned by the firm. They change from year to year. Examples include:
Anything receivable due Anything payable prepaid Bank (money in the bank) Cash (money in cash box..) Closing Stock Debtors (people that owe the firm money)
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Fixed Assets Are owned by the firm. They last a long time. Examples include:
Buildings Equipment Fixtures & Fittings Machinery, motor vehicles Premises
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Depreciation Is loss of value of an asset due to
wear and tear. Example: a new Ford Transit van
purchased for delivering goods costs €21,865 new, but will be worth less after one year
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Net Book Value (NBV) Fixed Asset – Depreciation = NBV €10,000 - €500 = €9,500
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Liability Is something a business owes
another firm. It can be current or long term.
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Current Liability Is something that a firm owes. It is paid within one year. Examples include:
Accruals, payable due Anything receivable prepaid Bank Overdraft Creditors (people you owe money to) Dividends declared
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Long Term Liabilities Is something a firm owes. It takes longer than one year to
pay off. Example: Long Term Loan.
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Authorised Share Capital
Is the maximum number of shares a company can sell.
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Issued Share Capital Is the actual number of shares a
company has sold
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Capital Employed Is all the money that is invested in
the business. Includes:
Issued Share Capital Long Term Loans Reserves
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Working Capital Current Assets – Current Liabilities. CA > CL = Liquid You have enough cash to run the
business
CA < CL = Overtrading You do not have enough cash to run the
business.