Chapter 2 - Format of Financial Statements

Question 0

THE INCOME STATEMENT (BY NATURE)

Answer 0

INCOME STATEMENT FOR THE YEAR ENDED ……….

Revenue
Other income
(Total expenses)*
Profit before tax
(Tax expense)
Profit after tax

• Total expenses are made up of the following:
  1. Changes in finished goods and WIP
  2. Raw materials and consumables used
  3. Employee benefits expense
  4. Depreciation and amortisation expense
  5. Other expenses

Question 1

THE INCOME STATEMENT (BY FUNCTION)

Answer 1

INCOME STATEMENT FOR THE PERIOD ENDED ……….

Revenue
(Cost of sales)
GROSS PROFIT
Other income
(Distribution costs)
(Administration costs)
PROFIT FROM OPERATIONS
(Finance costs)
Investment income
PROFIT BEFORE 
(Tax expense)
NET PROFIT FOR PERIOD

Question 2

THE STATEMENT OF COMPREHENSIVE INCOME

Answer 2

OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED ……….

Profit for the year (I/S)
Other comprehensive income
   Gain on property revaluation
Other comprehensive income for the year net of tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Question 3

DOUBLE ENTRY

REVALUATIONS

Answer 3

DR Cost
DR Accounting depreciation
CR Revaluation reserve

Question 4

THE STATEMENT OF CHANGES IN EQUITY

Answer 4

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED ……….

Share Cap | Share Prem | R/E | Revaluation Reserve | Total

Balance b/f
Total Comprehensive Income
Dividends
Issue of shares
Balance c/f

Question 5

THE STATEMENT OF FINANCIAL POSITION

Answer 5

THE STATEMENT OF FINANCIAL POSITION AS AT ……….

ASSETS
Non-current assets
   Property, plant & equipment
   Investments
   Intangible assets
Current assets
   Inventories
   Trade & other receivables
   Cash & cash equivalents
Non-current assets held for sale
TOTAL ASSETS

EQUITY & LIABILITIES
Capital & reserves
   Ordinary share capital
   Preference share premium
   Retained earnings
   Revaluation reserve
   Other reserve
Non-current liabilities
   Long term borrowings
Current liabilities
   Trade & other payables
   Short term borrowings
   Current tax payable
   Provisions
TOTAL EQUITY & LIABILITIES

Question 6

DOUBLE ENTRY

ORDINARY DIVIDENDS PAID

Answer 6

DR Retained earnings

CR Cash

Question 7

DOUBLE ENTRY

REDEEMABLE PREFERENCE DIVIDENDS

Answer 7

DR Finance costs (I/S)

CR Dividend payable/ cash

Question 8

DOUBLE ENTRY

IRREDEEMABLE PREFERENCE DIVIDENDS

Answer 8

DR Retained earnings

CR Dividend payable/ cash