Financial Statements (Income / SOFP) Flashcards
Function of the Income Statement
Shows the profit or loss made in a business
Function of the Statement of Financial Position
Summaries
a company’s assets (what it owns)
liabilities (what it owes)
equity (assets less liabilities)
What are trade payables
Suppliers that are owned money by the business because they sold goods to the business on credit
What are trade receivables
The amount of money a business is owed by its customers for goods or services that have been paid for
What are non current assets
Resources owned by the business for more than a year before being converted to cash and sold on
What are current liabilities
Amounts owed by the business that must be repaid within a year
Examples: Accruals, Trade payables + Bank Overdraft
What are non current liabilities
Amounts owed by the business that are fully repaid after more than a year
E.g: Bank Loans, Mortgages and debenture
What are current assets
Assets that are owned by the business for less than a year before being converted to cash and sold on
Discount received
Cash discount received from suppliers. Added after gross profit to calculate profit for the year
Revenue definition
The value of goods and services sold, even if they havent been paid for
Cost of sales
The cost to the business of buying or making the goods that it’s sold
What is depreciation
Spreading the cost of a non current asset over its useful life
In turn this decreases the value of non current assets over time
Carriage in def
The cost of transporting goods purchased by the business and is included as past of ‘Cost of Sales’
