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A method of recording the value or wealth of a business at a given moment in time
Statement of financial position
What the business owns
Assets
What the business owes
Liabilities
Money owed for less than one year
Current liabilities
Money owed for more than one year e.g. mortgages/debentures/bank loans (more than 1 year)
Non-current liabilities
The ability to convert assets into cash
Liquidity
Allowance for the wear and tear on fixed tangible assets - a equipment ages the value decreases
depreciation
Building, machines, equipment owned by a business
Non-current (fixed) assets
Assets that can be seen
Tangible assets
Assets that can’t be seen (e.g. patent/goodwill/)
Intangible assets
Value for a business’ reputation/brand
Goodwill
Protecting the intellectual property of the business
Patents
Need to be cautious (careful) when valuing a business
Prudence
Investments made by business in government bonds or long term shares
Financial fixed assets
Everything owned by the business which is not a non-current (fixed) asset
Current assets
Stock in the form of materials, unfinished goods, finished goods
Inventory
