Financial statement reporting for a trading GST business Flashcards
describe general purpose financial statements
a set of financial reports that are intended to be used by a wide range of users, including investors, creditors, regulators, and management
describe the classifications used in the fully classified statement of profit or loss and the statement of financial position
describe accounting concepts and principles that underpin the preparation of financial statements
explain the qualitative characteristics that guide the preparation of financial statements
what is a SOPL
- shows details of profit or loss for the period
- classification of revenues and expenses will depend on the size, activities and type of ownership of the business
what is a revenue provide examples
- service fees
- sales
- sales of individual items to conceptualise the difference between revenue of each item m are it more appropriate for the business. meaningful budgeting.
what is an selling expense
selling expenses: related to promotion, selling and distribution of product
what are the 4 types of expenses
selling expense, administrative expense, finance expense, cost of sales
what are administrative expenses?
administrative expenses: related to running of the office and any other general expenses such as insurance, rate etc
what are finance expenses?
finance expenses: related to financing the business activities or expenses incurred in collecting cash
- financing: interest, bank charges
- collecting cash: bad debits, credit card charges
what are the 2 types of assets?
current & non-current
what are the 2 types of liabilities ?
current & non-current
what is a current liability?
current liabilities: are to be paid within one year
what is a current asset?
current assets: consume or converted into cash within 1 year
what is a non current liability?
non-current liabilities: are to be repaid longer than one year
what is a non current asset?
non current asset: that are retained for longer than one year
3 examples of non current assets
- other financial assets - held for revenue = bonds and shares
- property plan equipment - operation of business not tinted for resale
- intangible assets - such as copyrights and patents
what is the monetary principle?
states that all transactions are recorded in common monetary unit
what is the going concern principle
assumes that any organization will continue to operate its business for the foreseeable future.
- continue operations indefinitely
- not likely liquidated
historical cost principle
all assets are recorded at initial purchase price, paid at time of acquisition
