IGCSEBusinessCIERevision Notes5. Financial Management5.4 Statement of Financial PositionThe Main Features of a Statement of Financial Position

The Main Features of a Statement of Financial Position (CIE IGCSE Business)

Revision Note

Lisa Eades

An Introduction to the Statement of Financial Position

  • The Statement of Financial Position shows the financial structure of a business at a specific point in time
     
  • It identifies a businesses assets and liabilities and specifies the capital (equity) used to fund the business operations

  • The Statement of Financial Position is also known as the Balance Sheet
    • It is called the balance sheet as the net assets are equal to the total equity

Different Types of Assets

  • Assets are items that are owned by a business
    • Non-Current Assets are items owned by the business in the long-term
      • Examples include tangible assets such as buildings, land, machinery and vehicles
      • Non-current assets may be intangible such as patents, goodwill or  brand value
         
    • Current Assets include cash and items that can be turned into cash relatively quickly, usually within 12 months
      • The four types of current assets are cash in hand, cash in bank, debtors (trade receivables) and inventory (stock)

Different Types of Liabilities

  • Liabilities are amounts of money owed by a business (debts) 
    • Non-current liabilities are amounts owed that do not need to be paid back for at least 12 months
      • E.g. Long-term loans such as mortgages

    • Current liabilities are amounts owed that must be repaid within 12 months
      • E.g.Creditors (trade payables) and bank overdrafts

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    Lisa Eades

    Author: Lisa Eades

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.