Accounting Question Flashcards
Name and explain the THREE differences between the balance sheet and income statement for a company
Explain the following terms and state how they apply to the balance sheet
i) Depreciation
ii Tangible assets
iii Shareholder’s Funds
iv Authorised Share Capital
- Depreciation
Depreciation is the loss in value of a tangible fixed asset due to:
- time
- wear and tear
- rate of extraction
- advances in technology
- Tangible Assets
Land, Buildings and Equipment
- Shareholders Funds
Funds invested in the company through stock purchases or any other private investments.
Equity and accumulated funds
- Authorised Share Capital
Max amount of shares a company is legally allowed to issue
Explain why a Statement of Cash Flows is considered important
Outline TWO reasons why the new supplier would want the financial statements prior to agreeing to the new contract.
- Check their crediworthiness - Will they pay their expenses back?
- Examine the customers’ payment history and overall financial stability.
Name two issues to consider when looking at cashflows
Name the two types of cost that are included in Cost of Sales
What is the difference between a non-current and a current asset
