Definitions of components of Financial Statement

Question 1

Revenue

Answer 1

Sales (trading entity), Fees Received (service entity)

Question 2

Other Income

Answer 2

All other revenues/income and gains

Examples (not limited to): interest received,

Question 3

Distribution Costs

Answer 3

Distribution costs are expenses incurred in transferring ownership of finished goods to the consumer. Those expenses incurred through the promotion, storage, selling and delivery of the inventory for sale.
Examples (not limited to): Advertising,

Question 4

Administrative Expenses

Answer 4

Administrative expenses are costs associated with the administration of the entity as a whole
Examples (not limited to): Office Salaries/Wages, Rent,

Question 5

Finance Costs

Answer 5

Finance costs arise from an entity financing its operations from external sources. Finance Costs are limited to different types of interest paid.
Examples: Interest on overdraft,

Question 6

Investments

Answer 6

All investments, such as shares, government stock, term deposits will be classified as non-current assets. Investments will be stated at cost in the SOFP. The market value of shares on balance sheet date will be disclosed as being their current fair value in the notes. The interest rate and maturity date of investments in Government Stock or Fixed Term Deposits will be disclosed in the notes or on the face of the balance sheet.

Question 7

Non Current Liabilities

Answer 7

All Liabilities that are not current

Question 8

Non Current Assets

Answer 8

All Assets that are not current

Question 9

Current Assets

Answer 9

All Assets that will be turned into cash or used up within the next accounting period

Question 10

Current Liability

Answer 10

All Liabilities that will be repaid within the next accounting period

Question 11

Plant, Property and Equipment (PPE)

Answer 11

They are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. They are expected to be used during more than one period

Question 12

Equity

Answer 12

Equity is the residual interest in the asset of the busines after deducting all liabilities

Question 13

Intangible Assets

Answer 13

These generate income over future accounting periods but cannot be physically touched. eg, goodwill, patents, trademarks, copyright

Question 14

Cost of Goods Sold (COGS)

Answer 14

Expenses in getting the goods into the store