Exam code: 0450, 0986 & 0264, 0774
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Define non-current asset.
A non-current asset is an item owned by a business long-term—usually for more than 12 months—such as buildings, machinery, or patents.
Define current liability.
A current liability is an amount owed by a business that must be repaid within 12 months, such as trade payables or bank overdrafts.
What are the three main types of current assets?
The three main types of current assets are cash, trade receivables, and inventory.
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Define non-current asset.
A non-current asset is an item owned by a business long-term—usually for more than 12 months—such as buildings, machinery, or patents.
Define current liability.
A current liability is an amount owed by a business that must be repaid within 12 months, such as trade payables or bank overdrafts.
What are the three main types of current assets?
The three main types of current assets are cash, trade receivables, and inventory.
What is another name for the statement of financial position?
The statement of financial position is also known as the balance sheet.
How do you calculate total assets on a statement of financial position?
Total assets are calculated by adding non-current assets and current assets.
What does working capital show about a business?
Working capital shows the money a business has available for day-to-day activities, such as paying bills and covering wages.
True or False?
Capital employed is always equal to net assets.
True.
Capital employed is equal to net assets on the statement of financial position.
Which part of the statement of financial position helps assess if a business can pay short-term debts?
Working capital in the statement of financial position helps assess if a business can pay short-term debts.
Define non-current liability.
A non-current liability is an amount owed by a business that does not need to be repaid for at least 12 months, such as a long-term loan or mortgage.
Define capital employed.
Capital employed is the total amount of money a business uses to operate and grow, usually including equity and non-current liabilities.