1001 Everything Flashcards
What order do entries in the sales journal go?
Debits are written first, credits written beneath.
What information do you have to put together before completing the income statement?
Total the sales (receipts from sales plus trade receivables)
Total the purchases (payments to suppliers plus trade payables)
Take away any prepayments
Add any accruals
Work out depreciation
Work out increase in allowance for doubtful debts and the difference between the two years.
What is the format of an income statement (basic)?
Sales
Less returns inwards
Less cost of sales
Opening inventory
Add Purchases
Add carriage inwards
Less returns outwards
Less closing inventory
Then that figure is taken from sales
Gross profit
Add discounts received
Less expenses
This gives net profit
What is the format for a balance sheet?
Non current assets
Current assets
Total assets
Less liabilities
Non Current liabilities
Current liabilities
Net assets
Financed by
Opening capital
Add net profit
Less drawings
Closing capital
What is the title for an income statement ?
[Business name] income statement for the year ending….
What is the title for a balance sheet ?
[Business name] balance sheet as at ….
What is the title for a statement of changed in equity?
[Busines name] statement of changes in equity for the year ended….
What is the table format for a statement of changes in equity?
Rows
Share capital
Share premium
General reserve
Retained earnings
Total equity
Columns
Opening balance
Bonus issue of shares
Profits for the year
Dividends paid
Transfer to general reserve
Closing balance
List the expenses in an income statement.
Any expenses
Bad debts
Depreciation
Adjustment in provision for doubtful receivables [ONLY THE INCREASE]
Carriage outwards
Discounts allowed
List assets found on a balance sheet.
Non current
Assets (machinery, vehicles, etc)
Less depreciation
Current assets
Inventory
Accounts receivable
Provision for doubtful receivables [WHOLE NEW AMOUNT]
Prepayments
Cash in hand
Bank
List liabilities found on a balance sheet.
Current
Accruals
Accounts payable
Bank overdraft
What is an error of omission ?
No debit, no credit
What is an error of commission ?
Wrong persons account
What’s an error of principle ?
Wrong class of account
What’s compensating errors ?
Separate errors cancel each other out.
What’s an error of original entry ?
The figure inputed was wrong
What’s complete reversal of entries
Correct accounts but entries on wrong sides of accounts
What’s transposition errors
Figured posted in wrong sequence
What is a suspense account?
If the error cannot be found, only then is it necessary to insert a suspense account to balance the trial balance.
Where does the suspense account show in the balance sheet ?
Where the balance is a credit balance, it is shown as a current liability in the balance sheet.
When the balance is a debit balance, it is recorded as a current asset.
What type of errors require a suspense account?
Addition errors
Posting errors
Trial balance errors
Compensating errors
How to work out the net profit figure from incomplete entries ?
Net profit = this years capital - last year’s capital
How to work out this year’s capital from incomplete entries
Last year’s capital + profits - drawings = this year’s capital
What four primary statements does the IAS 1 state?
Statement of financial position
Statement of comprehensive income
Statement of changes in equity
Statement of cash flows
What is the format of an income statement for a limited company ?
Revenue
Less cost of sales
Gross profit
Less distribution costs
Less admin expenses
Profit from operations
Less finance costs
Profit before tax
Less tax
Profit for the year
What are sources of long-term finance for a Ltd company ?
Share issues
Retained profits
Long-term loans
What are the 2 maim types of shares
Ordinary shares (all companies have)
Preference shares (only some have)
What are ordinary shares
Also known as equity shares, these carry voting rights and the amount of annual dividend can vary.
What are preference share
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary shares
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are preference shares
Also known as preferred shares, they normally carry no voting rights and the annual dividend is a fixed amount per share. They must be paid before ordinary sharesh
What are the types of preference shares
Redeemable (shown as non current liability)
Non redeemable (shown as a component of equity)
What is the format of a balance sheet for a ltd company?
non current assets
current assets
less non current liabilities
less current liabilities
net assets
equity
share capital
share reserves
reserves
retained earnings
What is the formula for the gross profit percentage
Gross profit/ sales * 100
What is the formula for the net profit percentage
Net profit/ sales * 100
What is the formula for the return on capital employed ratio
Net profit / capital employed * 100
What is the formula for the inventory turnover ratio
Cost of sales / average inventory
What is the formula for the accounts receivable (accounts receivables/ sales) ratio
Accounts receivable / sales * 365
What is the formula for the accounts payable (accounts payable / purchases) ratio
Accounts payable / purchases * 365
What is the formula for the current ratio
Current assets / current liabilities
Written as ____:1
What is the formula for the acid test ratio
(Current assets - inventory) / current liabilities
Written as ____:1
What is the formula for the gearing ratio
(long term loans + preference shares) / (ordinary share capital + reserves + preference shares + long term liabilities)
What is the formula for the earnings per share ratio
net profit after interest and tax and preference dividends / number of ordinary shares issued
what is the formula for the price/ earnings ratio
market price per share/ earnings per share
what is the formula for the dividend yield ratio
gross dividend per share/ market price per share
what is the dividend cover ratio
net profit after tax and preference dividends / ordinary dividends paid and proposed
