Preparing the balance sheet: non-current and current assets, liabilities, and capital.
The statement of financial position (balance sheet) shows what a business owns and owes at a point in time, based on Assets = Capital + Liabilities.
Structure
Non-current assets — long-term (premises, machinery), shown at cost less accumulated depreciation (carrying value).
Current assets — inventory, receivables, bank, cash.
Current liabilities — payables, bank overdraft (due within a year).
Non-current liabilities — long-term loans.
Capital — opening capital + profit − drawings.
Net current assets (working capital) = current assets − current liabilities.
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