Definitions of components of Financial Statements

Question 1

Revenue

Answer 1

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

Question 2

Other Income

Answer 2

All other revenues/income and gains

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.

Question 4

Administrative Expenses

Answer 4

Administrative expenses are costs associated with the administration of the entity as a whole

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.

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

Plant, Property and Equipment

Answer 11

Tangible items that are held for the use in the production or supply of goods and services, rental or administration.

Question 12

Equity

Answer 12

Residual interest

of the assets after deducting liabilities, e.g. Assets-Liabilities=Equity

Question 13

Intangible Asset

Answer 13

These generate income over future accounting periods but cannot be physically touched, e.g. goodwill, patients, trademarks, copyright

Question 14

Costs of Goods Sold

Answer 14

The expenses in getting the goods into the store