Final accounts Details Flashcards
Examples of internal stakeholders
-Owners/shareholders
-Managers
-Employees
Examples of external stakeholders
-Pressure groups/Unions
-Suppliers
-Government
-Bank
-Media
-Competition
-Customers
Format of a statement of profit or loss
Format of a statement of profit or loss(for non-profit social enterprises)
Examples of expenses
-Rent
-Advertising
-Lighting
-Administrative staff salaries
-Transport
In statements of financial position/balance sheets, net assets and equity must always be equal(T/F)
True
Examples of current assets(in statements of financial position)
-Cash
-Debtors
-Stock
Examples of current liabilities(in statements of financial position)
-Overdrafts
-Trade creditors
-Short-term loans
Examples of current assets(in statements of financial position)
-Buildings
-Machinery and equipment
-Vehicles
Examples of current assets(in statements of financial position)
-Borrowing(long-term)
-Mortgage
In statements of financial position, depreciation is accounted for for non-current assets(T/F)
True
Formula for total equity
Total equity = Retained earnings + Share capital(for-profit only)
Examples of intangible assets
-Patents
-Copyright
-(Registered) trademark
-Goodwill
Format of a statement of financial position
Elements in a statement of profit or loss
Sales revenue → Cost of sales → Gross profit → Expenses → Profit before interest and tax → Profit before tax → Profit for the period → Dividends(if applicable) → Retained earnings
Elements in a statement of financial position
Non-current assets → Current assets → Total assets → Current liabilities → Non-current liabilities → Total liabilities → Net assets → Total equity
Causes of depreciation of non-current assets
-Wear and tear
-Equipment not up to latest standards(i.e. obsolescence)
Ways to calculate depreciation
-Straight-line method of depreciation
-Units of production method of depreciation
Formula for straight-line method of depreciation
Formula for units of production method of depreciation
Advantages of the straight-line method of depreciation
-Easy to calculate and apply
-Complete value of the asset is accounted for in the scrap value so the full value is accounted for
Disadvantages of the straight-line method of depreciation
-Assumes that the asset is used evenly throughout its life
-Depreciation figures may not be accurate in certain cases where the useful life or scrap value cannot be predicted
Advantages of the units of production method of depreciation
More realistic and accurate for many types of assets
Disadvantages of the units of production method of depreciation
More complex to calculate
Formula for contribution per unit
Contribution per unit = Price per unit - Variable cost per unit
Formula for margin of safety
Margin of safety = Current level of output - Break-even quantity
Formula for break-even quantity
fixed costs ÷ contribution per unit
Formula for(profit at a certain level of output)
(Output × contribution per unit) – fixed costs
The break-even point is where…
total revenue = total costs
