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AC > Company Financial Statements > Flashcards

Company Financial Statements Flashcards

1
Q

IAS 1 Company Statement Of Profit or Loss format

A

Revenue
Cost of Sales

GROSS PROFIT
Other operating income
Distribution costs
Admin expenses

OPERATING PROFIT
Finance cost
Investment income

PROFIT BEFORE TAX
Income tax

PROFIT FOR THE PERIOD

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2
Q

Finance cost

A

Interest expense

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3
Q

Investment income

A
  1. Interest income
  2. Dividend income
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4
Q

Revenue

A

Income arising from ordinary activities of an entity

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5
Q

IFRS 15 Revenue from Contracts with Customers 5 steps for recognition of revenue

A
  1. Identify contract with customer
  2. Identify separate performance obligations
  3. Determine transaction price
  4. Allocate transaction price the the performance of obligations
  5. Recognise revenue when a performance obligation is satisfied
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6
Q

Identify contract with customer

A

To understand what has been agreed

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7
Q

Separate performance obligations

A

Supply of goods/services

Should be accounted for separately if it could be sold separately (single in performance obligation)

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8
Q

Allocate transaction price to the performance obligations

A

Allocate in proportion to stand alone selling price of each performance obligation

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9
Q

Performance obligation being satisfied

A

When customer obtains control of the promised goods/services

Any point of time or over time

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10
Q

Cost of sales

A

Cost of goods/services sold

Production related

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11
Q

Distribution costs

A

Selling or delivering

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12
Q

Administrative expenses

A

All other expenses

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13
Q

Purchases classification

A

COS

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14
Q

Carriage inwards classification

A

COS

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15
Q

Closing inventory classification

A

COS

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16
Q

Substantial losses of inventory classification

A

COS

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17
Q

Production staff wages classification

A

COS

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18
Q

Maintenance expenses classification

A

COS

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19
Q

Depreciation expenses of production and losses on disposal classification.

A

COS

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20
Q

Wages of marketing and distribution staff classification

A

Distribution costs

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21
Q

Sales commission classification

A

Distribution costs

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22
Q

Vehicle running costs classification

A

Distribution costs

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23
Q

Carriage outwards

A

Distribution costs

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24
Q

Depreciation of motor vehicles used for distribution classification

A

Distribution costs

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25
Q

Marketing costs (advertising, promotion)

A

Distribution costs

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26
Q

Amortisation classification

A

Admin expenses

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27
Q

Substantial loss of inventory expense classification

A

Admin expenses

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28
Q

Irrecoverable debts expense classification

A

Admin expenses

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29
Q

Company statement of financial position layout

A

Assets
Non-current
PPE
Intangible
Investments
Current
Inventories
Trade and other receivables
Prepayments
Cash + equiv

Total Assets

Equity and Liabilities
Equity
Ordinary share capital
Irredeemable preference share capital
Share premium account
Reserves
Retained earnings

Non-current liabilities
Loan notes
Current liabilities
Trade and other payables
Short term borrowings
Tax payable

Total equity and liabilities

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30
Q

Overdraft classification

A

Short term borrowings

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31
Q

Ordinary shareholders

A

Own the share capital and reserves of the company
Have voting rights
May receive dividend (always after preference shares)

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32
Q

Ordinary shares classification

A

Equity

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33
Q

Ordinary dividends expressed as

A

pence per share

34
Q

Preference shareholders dividend calculated

A

% NV

35
Q

Preference shareholders own only…

A

Share capital only. Not reserves

36
Q

Types of preference share

A
  1. Redeemable
  2. Irredeemable
37
Q

Redeemable preference shares classification

A

Debt

(Not equity)

38
Q

Redeemable preference share dividends classification

A

Finance costs

39
Q

Irredeemable preference shares classification

A

Equity

40
Q

Share capital values

A

Nominal/par value

Issued at an issue price (at least NV)

41
Q

Share market value

A

Calculated in reference to stick market if listed

Not on financial statements

42
Q

Share issue DE

A

Dr Cash - Issue price x no. shares
Cr Share capital - NV x no. shares
Cr Share premium - Excess over NV x no.

43
Q

Share capital + premium classifications

A

Equity

44
Q

Rights issue

A

Offer of new shares to existing shareholders in proportion to their existing shareholding at a stated price (usually below MV but has to be above NV)

45
Q

Rights issue DE

A

Same as share issue

46
Q

Bonus/capitalisation/scrip issue

A

Issue of new shares to existing shareholders in proportion to existing shareholding. No cash received. So funded from reserves. Any reserve can be used. Though non-distributable reserve used in preference to reserves which can be distributed. If share premium account insufficient then excess usually debited to retained earnings.

47
Q

Bonus issue DE

A

Dr share premium (/other reserve)
Cr share capital

48
Q

Authorised share capital

A

NV of maximum no. shares a company can have in issue at once

49
Q

Issued share capital

A

NV of shares actually issued

50
Q

Called up share capital

A

NV of issues share capital requested from shareholders

Shows on SFP

51
Q

Paid up share capital

A

NV of called up share capital paid by shareholders

52
Q

Differences between called up and paid up share capital classification

A

A receivable

53
Q

Retained earnings definition

A

All the retained profits of the company up to the SFP date

54
Q

Retained earnings calculation

A

RE b/f + Net Profit - Dividends

55
Q

General reserve

A

Extension of retained earnings
A c may choose to transfer some retained earnings into a general reserve

56
Q

Statement of changes in equity movements

A
  1. Profit
  2. Dividends paid
  3. Transfers between reserves
  4. Share issues
57
Q

Reserves

A
  1. Share premium
  2. Retained earnings
  3. General reserve
58
Q

Issue of a long term liability

A

Loan notes

59
Q

Loan notes aka

A

Bonds

Debentures

60
Q

Loan notes process

A

Someone buys a loan note for a NV
Effectively loaning that amount to C
Repayable in certain no. years
Holder receives annual fixed %

61
Q

Loan note issue DE

A

Dr Cash
Cr Non-current liabilities

62
Q

Loan note interest rate aka

A

Coupon rate

63
Q

Loan note interest classification

A

Finance cost (P&L)

64
Q

Loan note interest payment DE

A

Dr Finance cost
Cr Cash/Accrual

65
Q

IAS 37 Provisions, Contingent liabilities and contingent assets: Provision definition

A

Liability to a 3P, where either the amount or timing of payment isn’t certain

E.g. warranty claims, refunds for returned goods, litigation

66
Q

Recognising a provision

A

Present obligation to incur the expenditure
+
Probable (<50%) that expenditure will occur

67
Q

Are allowances provisions?

A

No, they are adjustments to value of asset, not liabilities.

68
Q

Recording a provision DE

A

Dr Relevant expense account
Cr Provision (SFP)

69
Q

When expenditure for which provision created is incurred DE

A

Dr Provision
Cr Cash at bank

70
Q

Expenditure less than provision

A

Excess accounted as profit

71
Q

Expenditure more than provision

A

Excess recoded as an expense

72
Q

Accounting for company tax based on

A

Estimates initially (based on net profit)

Because C’s tax bill is not finalised and paid until 9m after YE

73
Q

Accounting for tax liability DE

A

Dr Tax expense (P&L)
Cr Tax payable (SFP)

74
Q

Paying actual tax bill DE

A

Dr Tax payable
Cr Cash

75
Q

Tax more than liability accrued DE

A

Dr Tax expense
Cr Tax payable

76
Q

Tax less than liability accrued DE

A

Dr Tax payable
Cr Tax expense

77
Q

What is the opening balance for working out tax payable?

A

Last years’ estimated tax liability

78
Q

What is this years’ tax payable closing liability?

A

This year’s tax estimate for next year

79
Q

Statement of profit or loss tax charge consists of

A
  1. Tax liability for the year
  2. Under/Over provision in prior year
80
Q

A debit on the income tax payable account is an over or under provision from previous year?

A

Under provision

81
Q

A credit on the income tax payable account is an over or under provision from previous yea

A

Over provision

AC (15 decks)

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