3.5

Question 1

income statement

Answer 1

measures the business performance (income & costs) over a given period, usually a year

Question 2

statement of financial position

Answer 2

snapshot of a business’s assets and its liabilities on a particular day

Question 3

cash flow statement

Answer 3

shows how the business has generated and disposed of cash and liquid funds during a specific period

Question 4

examples of non-current liabilities

Answer 4

• long -term borrowing
• other long term liabilities

Question 5

examples of current liabilities

Answer 5

• trade creditors (payables)
• Short-term borrowing
  -accrues & provisions - e.g. tax

Question 6

examples of non-current assets

Answer 6

• land & buildings
• plant & machinery
• goodwill - value of the business for it containing due to loyal customers

Question 7

examples of current assets

Answer 7

• cash balances
• trade debtors (receivables)
• inventories ( stocks)

Question 8

2nd side of the statement of financial position

Answer 8

+ share capital
+ reserves profit

= capital & reserves/ total equity

Question 9

1st side of the statement of financial position

Answer 9

+ noncurrent assets
+ current assets
- current liabilities
- noncurrent liabilities

= net assets

Question 10

what are payables

Answer 10

amount of money owed by a business to someone e.g. dividends

Question 11

total equity

Answer 11

shareholders fund and retained profits

Question 12

what are inventories

Answer 12

value of all the stock a firm holds

Question 13

what are receivables

Answer 13

sums owed by customers who have bought items for credit

Question 14

what are total current assets

Answer 14

sum of all current assets

Question 15

what are net current liabilities

Answer 15

current assets - current liabilities

Question 16

what are net assets

Answer 16

difference between total assets and total liabilities

Question 17

what is share capital

Answer 17

investment giving shareholder part- ownership in the company, with the right to dividends

Question 18

what is revenue

Answer 18

value of sales made in a trading period

Question 19

what are costs of sales

Answer 19

direct costs for making the product

Question 20

gross profit

Answer 20

revenue - operating costs

Question 21

what are distribution and administration expenses

Answer 21

expenses incurred that are not tied to a core function in the business

Question 22

what is operating profit

Answer 22

profit after deduction of costs of sales and overheads

Question 23

what is tax

Answer 23

mandatory contribution from a firm by a government entity

Question 24

what is profit attributable to shareholders

Answer 24

subtracting net income to a portion that belongs to what are called minority interests