19. The financial statements of single entities (company accounts) Flashcards
statement of changes in equity
capital
IAS1 presentation of financial statements
must show SFP SPL Disclosure notes statement of changes in equity statement of cash flow
Statement of profit or loss and other comprehensive income
SALES - COGS = GROSS PROFIT (as normal) - ADMIN EXPENSES (grouped) - DISTRIBUTION COSTS (grouped) = OPERATING PROFIT - INVESTMENT INCOME (dividends, interest) - FINANCE COST (interest paid on loans) = PROFIT BEFORE TAX - TAX EXPENSE = PROFIT FOR THE PERIOD \+ OTHER COMPREHENSIVE INCOME (gain loss on property revaluation) = TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Taxation charge on profits
DR taxation expense account (SPL)
CR taxation liability account (accrual current liability on SFP)
1st day next period
CR taxation expense account
DR taxation liability
we then pay bill
DR taxation expense account
CR Bank
if accrual over cooked by 1000 DR taxation expense account 99000 CR bank 99000 CR taxation liability 1000 DR taxation expense 1000
Taxation charge to SPL
Paid to the bank
+ opening accrual
- closing accrual
Sources of finance for a company
debt e.g. loans, redeemable preference shares (company has to pay the money back)
equity e.g. ordinary shares, irredeemable preference shares (don’t pay back)
Accounting for share issues
DR Bank account (issue price x no of shares)
CR Share capital (nominal value x no of shares)
CR share premium (the diff between issue price and nominal value x no of shares sold)
Dividends
shareholders return
paid in two installments;
during the year = interim
post year end = final
no legal requirement to pay
Shown in the statement of changes of equity
Dividends on ordinary shares
do not qualify for any special benefits
classed as ordinary dividends
Dividends on preference shares
get preferential treatment
normally state level of preference shares
irredeemable
Reserves
= capital
capital reserves (non distributable) revenue reserves (retained earnings)
Other comprehensive income
Statement of profit or loss as per usual + other comprehensive income = revaluation or property
operating profit
gross profit - operating expenses
Profit before tax
EBITDA
operating profit
+ investment income
- finance cost
Statement of changes in equity
opening capital \+ profits \+ share issues -/+ comprehensive income - dividends
