Chapter 4 - Financial Statements Flashcards
Gross Profit
The difference between sales and the cost of those sales
Profit
The final figure in the income statement when the gross profit is greater than the expenses that have been deducted from it
Loss
The final figure in the income statement when the gross profit is less than the expenses that have been deducted from it
Non-Current Assets
Resources owned by the business intended for continuing use in running the business rather than for resale
Current Assets
Resources owned by the company that are planned to be converted into cash within 12 months
Current Liabilities
Monies owed by the business due for repayment within twelve months
Net Current Assets
The difference between current assets and current liabilities
Non-Current Liabilities
Monies owed by the business due for repayment at a time after 12 months
Order of Liquidity
The order in which current assets are able to be turned into cash
Cost of Sales
Total purchases + carriage inwards and returns outwards adjusted for opening and closing inventory
Cost
The price paid for the asset
Estimated Useful Economic Life
The estimated time that the business will continue to use the asset
Net Cost
Initial cost of the asset less the estimated residual value at the end of the assets useful economic life
Estimated Residual Value
The estimated value of the asset at the end of its useful life
