Bookkeeping Flashcards
Objective of a financial statement
To provide information about the financial position, performance and changes in financial position of a business
Statement of financial position
Balance sheet - provides a snapshot of a companies financial condition at a specific point in time
Statement of Profit and loss
Statement that summarises the revenues, costs and expenses incurred during a specific period of time
Limited liability partnership
Partners only have limited liability to the partnership
A company is
A business owned by shareholders but ran day to day by a board of directors. The company has unlimited liability to its creditors but the shareholders only have limited liability to the company
The business is a seperate legal entity
Cost of sales
Direct costs associated with selling goods conservatives adjusted for movements in inventory
Capital expenditure
Purchase/improvement of tangible non-current assets such as buildings or machinery
Asset
Resource controlled by a business as a result of past events and from which future economic benefits are expected
Something you own
Non-current asset
Assets used over a period of over a year
Intangible assets
Assets that have no physical existence such as goodwill or a patent but still add value to the business
Tangible asset
A physical object that can be seen or touched for example buildings, computers
Current assets
Assets continually flowing through the business and are generally used within one year for example inventory and cash
Capital
The owners stake in a business or what the business owes the owner
Liability
A present obligation arising from past events, settlements which will result in an economic outflow of resources
Noncurrent liabilities
Amounts repayable after a year ie bank loan
