1. Revision of basic accounting concepts Flashcards

1
Q

Income Statement | Definition

A

like video; shows revenue and expense flows during accounting period

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2
Q

Cash Flow Statement | Definiton

A

like video; shows flows of cash in and out of business during entire accounting period

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3
Q

What´s the simple income satement format?

A

Sales Revenue - COGS = Gross Profit

Gross Profit - Operating Expenses (eg rent, salaries) = Operating Profit

Operating Profit + Non-operating income + non-operating expenses = Net Profit

-> G O N

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4
Q

Does it have effect on profit or cash? (increase, decrease, no)

  1. Repayment of borrowings
  2. Making a profitable sale on credit
  3. Buying a current asset on credit
  4. receiving cash from a credit customer
  5. depreciating a non current asset
  6. buying some inventories for cash
  7. making a share issue for cash
A
  1. P: no | C: yes
    2.
    ???
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5
Q

What migh be reasons why the cash generaed in a period wont be equal to the profit made?

A
  • mistakes
  • depreciation
  • corruption
  • bad debt
  • capital sales
  • credit sales
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6
Q

Structure of Cash Flow Statement

A

Cash Flows from operating activities
minus or plus
Cash Flows from investing activities
minus or plus
Cash Flows from financing activities

equals

Net increase (or decrease) in cash and cash equivalents over the period

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7
Q
A
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