3.4 Final account Flashcards

Include the exam theory part

1
Q

Appropriation account

A

Final section of a P&L account and shows how the next profit after interest and tax is distributed.

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2
Q

Balance sheet

A

Financial information on an organization’s assets, liabilities and the capital invested by the owners on one specific day, thus showing a ‘snapshot’ the firm’s financial situation.

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3
Q

Book value

A

The value of an asset as shown on a balance sheet.

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4
Q

Cost of goods sold(COGS) = Cost of sales (COS)

A

Represents the direct costs of producing or purchasing stock that has been sold.

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5
Q

Depreciation

A

The fall in the value of fixed assets over time, from wear and tear or obsolescence.

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6
Q

Final accounts

A

The published annual financial statements that all limited liability companies are legally obliged to report.

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7
Q

Fixed assets

A

Items owned by a business, not intended for sale within the next twelve months, but used repeatedly to generate revenue for the organization.

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8
Q

Goodwill

A

Intangible asset which exists when the value of a firm exceeds its book value.

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9
Q

Gross profit

A

Difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to its customers.

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10
Q

Historic cost

A

the purchase cost of a particular fixed asset.

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11
Q

Intangible assets

A

fixed assets that do not exist in a physical

form.

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12
Q

Net assets

A

show the value of a business by calculating the value

of all its assets minus its liabilities.

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13
Q

Net profit

A

The surplus that a business makes after all expenses have been paid for out of gross profit.

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14
Q

The profit and loss account ( or income statement)

A

Financial record of a firm’s trading activity over the past 12 months, consisting of three parts: the trading account, the P&L account and the appropriation account.

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15
Q

Reducing balance method

A

Method of depreciation that reduces the value of a fixed asset by the same percentage each year throughout its useful life. This is the more realistic method to use.

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16
Q

Residual value

A

The estimate of the scrap or disposal value of the asset at the end of its useful life.

17
Q

Retained profit

A

The amount of net profit after interest, tax and dividends have been paid. It is then reinvested in the business for its own use.

18
Q

Share capital

A

The amount of money raised through the sale of shares. It shows the value raised when the shares were first sold, rather than their current market value.

19
Q

Shareholders’ funds

A

The equity of the owners.

20
Q

Straight line method

A

Method of depreciation that reduces the value of a fixed asset by the same value each year throughout its useful life.

21
Q

Trading account

A

The first section of the P&L account, showing the difference between a firm’s sales revenue and its direct costs of trading.

22
Q

Window dressing

A

Refers to the legal act of creative accounting by manipulating financial data to make the results look more flattering