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Definitions to elements of the balance sheet following the ib business management structure
Balance sheet/ statement of financial position
Shows the value of an organization’s assets, liabilities and the owners’ equity at a particular point in time
Assets
The possessions of a businesss that have a monetary value, such as buildings, land, machinery, equipment, stock (inventory) and cash
Non-current assets/ fixed assets
Long-term assets or possessions of an organization with a monetary value but are not intended for resale within the next twelve months of the balance sheet date
Property, plant and equipment
Accumulated depreciation
The sum of the fall in a non-current asset’s value because of wear and tear over time
Current assets
Possessions of an organization with a monetary value, but intended to be liquidated within twelve months of the balance sheet date
Cash
The money an organization has either ‘in hand‘ (at its premises) and/or ‘at band‘ (i.e. in its bank account)
Debtors
The entities (individuals or businesses) that owe money to an organization as they bought goods or services on trade credit
Stock
The goods that a business has available for sale, per time period
Total assets
The sum of non.current assets and current assets
Current liabilities
The short-term debts of a business which need to be repaid within twelve months of the balace sheet date
Bank overdraft
Allow customers to temporarily take out more money than is available in their bank account
Trade creditors
The suppliers owed money as the business has purchased items on trade credit, so this form of current liability needs to be repaid at a future date
Short-term loans
Advances from a commercial lender that need to be repaid within 12 months of the balance sheet date
Other short-term liabilities
Non-current liabilities
The long-term debts of a business, falling due after 12 months of the balance sheet date
Borrowings (long term)
Total liabilities
The sum of current liabilities and non-current liabilities, i.e. the sum of all the monies owed by the business
Net assets
The overall valur og an organization’s assets after all its liabilities are deducted
Equity
Refers to the value of the owners’ stake in the business, i.e. what the business is worth at the time of reporting the balance sheet
Share capiral
The value of equity in a company that is funded by shareholders
Retained earnings/ retained profit
The equity in a business funded by net proft after tax, after dividends have been paid to shareholders
