Business – 10.1 Financial statements – Statement of financial position | e-Consult
10.1 Financial statements – Statement of financial position (1 questions)
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| Assets | £ |
| Cash | 50,000 |
| Inventory | 30,000 |
| Equipment (net) | 120,000 |
| Liabilities | £ |
| Trade payables | 40,000 |
| Bank loan (long‑term) | 70,000 |
Calculation of Net Assets:
- Total Assets = 50,000 + 30,000 + 120,000 = £200,000
- Total Liabilities = 40,000 + 70,000 = £110,000
- Net Assets (Owners’ Equity) = Total Assets – Total Liabilities = £200,000 – £110,000 = £90,000
Comment: A net asset figure of £90,000 indicates that the company has a positive equity position, meaning its assets exceed its liabilities. This suggests financial stability and provides a buffer for creditors, while also indicating that owners have a substantial claim on the business’s resources.