Definitions of components of Financial Statements

Question 1

Revenue

Answer 1

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

Question 2

Distribution Costs

Answer 2

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.

Question 3

Other Income

Answer 3

All other revenues/income and gains
Examples (not limited to): interest received, dividends received, rent received, commission received, gain on sale of an item of property, plant and equipment

Question 4

Administrative Expenses

Answer 4

Administrative expenses are costs associated with the administration of the entity as a whole, Note a decrease in the allowance for doubtful debts is shown as a credit (negative expense) in administrative expenses.

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.

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 Statement of Financial Position. 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 accounting period

Question 10

Current Liabilities

Answer 10

All liabilities that will be repaid within the next accounting period

Question 11

Property Plant and Equipment

Answer 11

Are tangible items that are held for the use in the production or supply of goods or services, for rental to others, or for administrative purposes

Question 12

Equity

Answer 12

The residual interest of the assets after deducting liabilities e.g. A-L=E

Question 13

Intangible Assets

Answer 13

These generate income over future accounting periods but can not be physically touched e.g. Good Will, patents, location, trademarks, copyright

Question 14

Cost of Goods Sold

Answer 14

Expenses in getting the goods into the store

Question 15

Bank (if a positive balance)

Answer 15

Current