Company Financial Statements Flashcards
what is a private company
ltd- shares not available to general public
what is a public company
plc - shares available to the general public. Often traded on the stock market (i.e listed)
what does IAS 1 presentation of financial statements say we should use to publish company accounts
- statement of financial positions
- statement of profit or loss
- statement of changes in equity
- statement of cash flows
- notes to the accountants
what is the benefit of using IAS 1 presentation of financial statements format?
makes comparability easier between different companies, and with previous years’ financial statements.
what is investment/finance income
Any income earned on investments, such as interest and dividends receivable.
what is finance cost?
interest on loan
when would you recognise revenue?
- when risk and rewards of ownership have passed
- when control has passed
what is cost of sales?
costs of the good/services being sold
eg. company wages, direct labour costs, sales commissions and materials used
what is distribution costs?
expenses relating to selling or delivering products or services
eg. vehicle running costs/carriage outwards, depreciation of NCA used for distribution
what is administrative expenses?
expenses not classified within cost of sales or distribution
eg. IDE, wages administrative staff, impairment losses
what is the double entry for issue of ordinary shares
DR cash (issue price x no. shares)
CR share capital (nominal value x no.shares)
CR share premium (excess over nominal value x no. shares)
what is a rights issue?
offer of new shares to existing shareholders in proportion to their existing shareholding value
what is a bonus issue?
new shares offered to existing shareholders for nothing
what is authorised share capital
maximum number of shares the directors have authority to issue
what is issued share capital?
nominal value of the shares actually issued to shareholders
what is called up share capital?
amount of the issued share capital which has been requested for payment from the shareholders
what is paid up share capital?
the called up share holder which has been paid by the shareholders
any differences between the called up and paid up share capital are show..
as a receivable in SFP
How do you calculate retained earnings?
retained earnings b/f + net profit - dividends - bonus issue
what shares do we use to calculate dividends
ordinary shares and irredeemable preference shares
what is the double entry to record issue of loan note
DR cash
CR non-current liabilities
what is a provision?
liability to a third party where either the amount or timing of the payment is not certain
in order to recognise a provision the liability needs:
- present obligation to incur the expenditure
- is it probable that the expenditure will be incurred
what is an allowance
adjustments to the value of an asset
how do we account for provisions?
recording a provision:
DR relevant expense
CR provisions
when expenditure is incurred:
DR provisions
CR cash
what do we do if expenditure if provisions is not the same as the amount provided
taken to P&L as an expense or income
what is the double entry for the under provision of tax?
DR tax expense
CR tax payable
what is the double entry for the overprovision of tax?
DR tax payable
CR tax expense
what side is the income tax on if its an over provision?
credit
what is the income tax on if its an under provision and what do we need to do?
debit and remove it by reversing the entry
What is a loan note, bond or debenture known as?
non-current liabilites and included in finance cost
can private limited companies be exempted from autdit?
yes if they meet small companies criteria
