8) Introduction to single entity accounts Flashcards
SOPL Proforma - Recite in order
Revenue (less) COS = Gross profit, (Less) Distribution costs (Less) Administrative expenses = Profit before interest and tax (EBIT), (Less) Finance costs = Profit before tax, (Less) Tax expense = Profit for the period from continuing operations, (Add) Other comprehensive income gains/losses on revaluations = Total comprehensive income for the period
What are the 4 types of financial statements?
SOPL, SOCIE, SOFP, SOC
SOCIE Proforma - Recite in order
Table format. Headers: “Share Capital”, “Share Premium”, “Revaluation Surplus”, “Retained Earnings”, “Total”. Rows: “Opening balance”, “Share issue”, “Revaluation surplus/deficit”, “Profit from SP&L”, “Dividends”, “Closing balance”
SOFP Proforma - Recite SECTION HEADERS in order
Assets (Non-current, Current), Equity and liabilities (Equity, Non current liablities, Current liabilities)
SOFP Proforma - Recite ASSETS section in order
Total Assets = Non-Current Assets (PPE + Other) + Current Assets (Inventories + Receivables (trade and other) + Cash and cash equivalents)
SOFP Proforma - Recite EQUITY AND LIABILITIES section in order
Total equity and liabilities = Equity (Share capital + Share premium + Revaluation reserve + Retained earnings) + Non-current liabilities (Long-term borrowings + Long-term provisions) + Current liabilities (Trade and other payables + Short-term borrowings + Current tax payable + Short-term provisions)
SOCashflow Proforma - how do you get to “Cash and cash equivalents at the end of the period” HEADERS of sections only
Cash flows from OPERATING activities + Cash flows from INVESTING activities + Cash flows from FINANCING activities = Net increase/(decrease) in cash and cash equivalents, (Add) Cash and cash equivalents at the beginning of the period = Cash and cash equivalents at the end of the period
SOCashflow Proforma - how do you calculate first section “Net cash from operating activities”?
Net cash from operating activities = Operating profit before working capital changes [Net profit before tax, (Adjust for) Depreciation/amortisation/impairment, Provision increases/(decreases), (Profit)/Loss on disposal, Interest receivable/investment income, Finance costs] + Cash generated from operations [(Increase)/decrease in inventories, (Increase)/decrease in receivables, Increase/(decrease) in payables] - (Less) Interest paid, (Less) Tax paid
SOCashflow Proforma - how do you calculate second section “Net cash from investing activities”?
Net cash from investing activities = (Less) Purchase of PPE - (Less) Purchase of investments + (Add) Proceeds from sale of PPE + (Add) Investment income received
SOCashflow Proforma - how do you calculate third section “Net cash from financing activities”?
Net cash from financing activites = (Add) Proceeds from share issue, (Add or Less) Proceeds/Redemption from long-term borrowings, (Less) Dividends paid
What makes an asset current or non-current?
Current = held for trading purposes or expected to be realised within 12 months of end of reporting period/the entity’s normal operating cycle. Inventory held for longer than 12 months is still current. Non-current = everything not meeting criteria for current.
What are the main differences between Ordinary/equity shares and Preference shares?
Equity/ordinary shareholders own a percentage of the entity’s net assets and have voting rights. Preference shareholders own a percentage of the entity’s share capital and do not have voting rights.
What are the two accepted methods of presenting a SOPL (and which more common)?
Expenses grouped by function (most common), Expenses grouped by nature (rare).
Functions are for example: Cost of sales, Distribution, Admin
Which accounting standard is concerned with the presentation of financial statements?
IAS 1 : Presentation of Financial Statements
Accruals Basis of Accounting - what is it?
Transactions should be recorded in the accounting period to which they relate regardless of whether or not cash has been received or paid. Expenses should be recognised in the statement of profit or loss and other comprehensive income so as to match against directly related income.
