Page 152 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

Grouping assets and liabilities into term debts. Examples of current liabilities
current and non-current classification include creditors or trade payables and
Grouping assets and liabilities into current bank overdrafts.
and non-current classification is usually
done with reference to the accounting Non-current liabilities
period under consideration. Under this Non-current liabilities are all liabilities
FOR ONLINE READING ONLY
classification, the following groups of other than current liabilities that become
assets and liabilities will be considered. due (they are supposed to be paid) beyond
one year. For this reason, non-current
Current assets liabilities are also known as long term
Current assets include cash and other debts. Examples of non-current liabilities
assets that are held primarily for the include bank loans and a term loan from
purpose of trading. Usually, it is expected a friend.
that they will be realised in the entity’s
normal operating cycle, and within the
next accounting period. In other words, Exercise 7.2
current assets are either cash (at bank or 1. Explain approaches used to present
in hand) or others that would be converted assets and liabilities in a statement
into cash within the next accounting
period under the normal operations of of financial position.
the business. Examples of current assets 2. How do you calculate gross profit
include inventory, accounts receivable, in the presence of an inventory at
cash at bank and cash in hand. the beginning and end of the period?

3. Describe the types of basic financial
Non-current assets
Non-current assets are all assets other than statements, and demonstrate your
current assets, which are expected to be understanding of each statement by
used in supporting business operations for explaining the specific information
more than one year or accounting period. it provided about an enterprise’s
Examples of non-current assets include financial performance and position.
land, building, furniture, vehicles, plants
and machinery owned by the business.
The format of a statement of financial

Current liabilities position
Current liabilities are those liabilities A format of a statement of financial
that need to be paid within one year position of a sole owner is presented as
or accounting period. For this reason, follows:
current liabilities are also known as short

144
Student’s Book Form One

Book Keeping Form 1 New 2024 FINAL.indd 144 18/10/2024 10:14