Finance - Final accounts Flashcards
what r the two types of final accounts
1 balance sheet - a financial statement that contains details of a company’s assets or liabilities at a specific point in time.
2. profit and loss statement/income statement - a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period.
how do uk if ur company is at a profit or loss
calc net profit: total revenue - total expenses
if profit is + ur at a profit
if profit is - ur at a loss
what r the three steps A FOR PROFIT ENTERPRISE NEEDS TO TAKE TO MAKE A PROFIT N LOSS STATEMENT?
1 - calc gross profit (sales r - cogs)
2 - calc profit or loss (take gross profit and sub expenses - technically ur taking ur profit before interest n tax here so u sub ur gross profit by any expenses stated.
3 - list how profits r distributed (dividends, retained profits - so ur equity) also u gotta mention the percent of interest u gotta pay and the amount of tax.
what does a statement of P or L look like for a non-profit?
- no dividends
- retained surplus
- no taxes
- they gotta pay interest but usually they can receive also like if they took out loans from banks or someshit to start off bus.
structure of a profit or loss statement:
sales revenue
cost of sales
gross profit
expenses (indirect)
profit before interest n tax
interest
tax
profit for period
dividends
retained profit/surplus
how to calc tax If its in a percent
take ur tax, divide it by 100 then multiply it w the profit before tax. so ur finding 15% of 40,000 example.
statement of financial position
balance sheet
current A’s
short term shit of value to u
non-current A’s
long term shit of value to u
current L’s
anything u owe within a year
non current L’s
long term borrowings - anything u owe to sum for longer than a year like mortgages. RESPONSIBILITIES
how do u organize ur current and non-current a’s
most liquid to least liquid:
Current Assets:
Cash and Cash Equivalents
Marketable Securities
Accounts Receivable
Inventory
Prepaid Expenses
Non-Current Assets:
Property, Plant, and Equipment
Intangible Assets
Investments
debtors and trade creditor where do they belong and wtaf r they?
Debtors are considered a current asset, referring to the amount of money owed to the business by customers who have been sold goods on credit.
Trade creditors are considered a current liability, referring to the amount of money the business owes to its suppliers for goods bought on credit.
order of balance sheet usually
current assets
non current assets
total assets
current liabilities
non-current liabilities
total liabilities
net assets (adding total assets and total liabilities)
equity (share capital and retained profits)
what r intangible assets bro
Intangible assets are assets that lack physical substance and are not easily converted into cash. They represent long-term resources that provide future benefits to a company
intangible assets contribute to a company’s competitive advantage and future earnings potential but are not physical in nature and cannot be touched or seen.
