Income statement Flashcards
What is a budget variance favorable
Where more money enters the account then expected
What is a budget variance adverse
Where more money left the account then expected
What is budget variance
Difference between actual and budget money spent
Formula for net book value
Net Book Value= Historic cost- Depreciation
What is depreciation
The value of assets decreasing over time
5 reasons why people window dress
1.Improve share price
2.Take-overs
3.Praise and rewards
4.Reduce tax bill
5.Improve credit rating
4 Methods of window dressing
1.Presentation of financial data
2.Overstating brand value
3.Hiding cost of poor investment
4.Sale and lease back to improve liquidity
What is window-dressing
The manipulation of financial accounts by businesses to make it seem more desirable.
ROCE equation
Net profit before tax/(equity + long term liabilities) x 100
What is Return on capital employed (ROCE)
It shows how effectively the capital invested in the business is being used to create profits.
What is the income statement
Shows Profits or loss from a business during a time period.
