Chapters 29,30,31

Question 1

Statement of Comprehensive Income

Answer 1

Financial document showing a firm’s income and expenses in a particular time period.

Question 2

Profit

Answer 2

Money left after all costs have been subtracted from revenue

Question 3

Gross profit

Answer 3

Profit before expenses.

Sales revenue - sales cost

Question 4

Operating Profit

Answer 4

Gross profit - expenses

Question 5

Distributed profit

Answer 5

Profit that is returned to the owners of a business

Question 6

Retained profit

Answer 6

Profit held by a business to be used for the future

Question 7

Divided

Answer 7

Share of the profit paid to shareholders in a company

Question 8

Finance cost

Answer 8

Interest paid on loans

Question 9

Finance income

Answer 9

Interest received by the business in deposit accounts

Question 10

Normal profit

Answer 10

Minimum profit a business needs to make to retain the interest of the owner

Question 11

Adjustments

Answer 11

Includes adjustments for the profits made on the disposal of assets

Question 12

Statement of financial position

Answer 12

Summary at a point in time of business assets,liabilities and capital

Question 13

Assets

Answer 13

Resources used or owned by a business; tools, equipment, stock and machinery

Question 14

Liabilities

Answer 14

Debts of the business

Question 15

Capital

Answer 15

Finance provided by the owners of the business

Question 16

Non-current assets

Answer 16

Assets that last for more than 1 year.

Question 17

Current assets

Answer 17

Assets likely to be changed into cash within a year

Question 18

Liquidity

Answer 18

Ease or speed with which assets

Question 19

Trade receivables

Answer 19

Amounts of money that are owed to a company but its customers

Question 20

Current liabilities

Answer 20

Debt that have to be repaid within a year

Question 21

Net Current Assets

Answer 21

Current assets minus current liabilities, also known as working capital.

Question 22

Non-current Liabilities

Answer 22

Debts that are payable after 12 month

Question 23

Net Assets

Answer 23

All assets - all liabilities

Question 24

Goodwill

Answer 24

Valué that a company has because it has a good relationship with its customers and suppliers

Question 25

Ratio Analysis

Answer 25

Mathematical approach to investigate accounts by comparing 2 related figures

Question 26

Gross Profit Margin

Answer 26

Gross Profit expressed as a percentage of Turnover

Question 27

Operating Profit Margin

Answer 27

Operating Profit expressed as a percentage of Turnover

Question 28

Current Ratio

Answer 28

Assesses the firm’s liquidity by dividing current assets by current liabilities

Question 29

Acid Test Ratio

Answer 29

Similar to the current ratio but excludes stocks from current assets

Question 30

Return on Capital Employed

Answer 30

Profit of a business as a percentage of the total amount of money used to generate it

Question 31

Quantitative Information

Answer 31

Information expressed in numbers

Question 32

Excise Duties

Answer 32

Taxes on selected goods, such as those on petrol and tobacco in the UK.

Question 33

Auditing

Answer 33

Accounting procedure that checks thoroughly the accuracy of a company’s accounts