Liquidity Liquidity shows us whether a business has enough assets to cover its debts. Liabilities Liabilities – what is owed by the business Current Liabilities – eg trade creditors (suppliers of goods on credit), bank overdraft, short-term loans (less than 1 year) Long-term liabilities – normally longer than 1 year – eg mortgage, bank loan Ĭapital Capital – provided by the owner of the business and treated as being owned to the owner of the business Profits – may increase capital Drawings – may decrease capital Reserves – monies retained by business CAPITAL = ASSETS - LIABILITIES īalance Sheet Assets Liabilities & Capital BalanceĪssets Assets – are what a business owns Fixed assets – have a lifespan of more than one year, eg machinery, motor vehicles Current Assets – are constantly changing eg stock, debtors, bank, cash The balance sheet shows a snapshot of a particular date in time. ![]() Balance Sheet SG Accounting & Finance Mr McGowanīalance Sheet The profit and loss account shows the history of the business activity throughout the financial year.
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