3.4 SL Final Accounts

Balance Sheet

this contains financial information on a business' assets, liabilities and the capital invested by the owners on one specific day, thus showing a 'snapshot' of the firm's financial situation

Cost of Goods Sold (COGS)

shown in the trading account and represents the direct costs of producing or purchasing stock that has been sold

Creditors

suppliers who allow a business to purchase goods and/or services on trade credit

Current Asset

this refers to cash or any other liquid asset that is likely to be turned into cash within 12 months of the balance sheet date

Current Liabilities

debts that must be settled within one year of the balance sheet date

Expenses

the indirect or fixed costs of production, such as administration charges, management salaries, insurance premiums and rent.

Final Accounts

the published annual financial statements that all limited liability companies are legally obligated to report.

Goodwill

an intangible asset which represents the value of an organization's image and reputation. It can also include the value of the firm's customer base and its business connections.

Gross Profit

the difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to its customers (i.e. the amount of money left over from sales of the goods or services)

Intangible Assets

fixed assets that do not exist in a physical form

Net Assets

shows the value of a business by calculating the value of all its assets minus its liabilities. This figure must match the equity of the business in its balance sheet

Non-current Assets

items owned by a business, not intended for sale within the next 12 months, but used repeatedly to generate revenue for the organization

Non-current Liabilities

the debts owed by a business, which are expected to take longer than a year from the balance sheet date to repay

Profit

the surplus (if any) that a business earns after all expenses have been paid for from the firm's gross profit

Profit & Loss Account

a financial record of a firm's trading activity over the past 12 months

Retained Profit

the amount of net profit after interest, tax and dividends have been paid. It is then reinvested in the business for its own use.

Share Capital

the amount of money raised through the sale of shares. It shows the value raised when the shares were first sold, rather than their current market value

Window Dressing

the legal act of creative accounting by manipulating financial data to make the results look more flattering