Page 281 - Cambridge IGCSE Business Studies

22: Balance sheets

Owner’s equity – money Non-current assets – anything
invested in the business the business owns, e.g. land,
by the owner buildings, machinery, computers
TOP TIP
and motor vehicles
Learn the definitions of key terms
for both the balance sheet and
the income statement. Using an Non-current
example for each will help you to liabilities – long-term
debts
explain your understanding. Current assets – e.g. cash,
accounts receivable,
bank balance, inventories
Current liabilities –
short-term debts

Figure 22.1 Assets and liabilities

ACTIVITY 22.2

Copy out the table below.

Balance sheet Non-current Current asset Current Non-current Owner’s equity
item asset liability liability

Inventories √
Bank loan
Share capital 279

Machinery
Overdraft
Trade receivable
Retained profit

Premises
Trade payable

Debenture

Place a tick in the correct column for each balance sheet item shown in the table. The first has been done for you.

TEST YOURSELF
1 Define the term non-current asset using an example.
2 Define the term non-current liability using an example.
3 Other than bank/cash balances, state two other current assets.
4 State two current liabilities.
5 Explain why a business wants its current assets to be greater than its current
liabilities.