interpretation of financial statements Flashcards
comprehensive income
profit and loss account
includes revenue, cost of sales, gross profit, sales expenses, administrative expenses, operating profit, interest, net profit, net after tax
stakeholder interest of comprehensive income
shareholders
interested in profit but also want to look at growth of business
stakeholder interest of comprehensive income
managers and directors
monitor the progress of the business
stakeholder interest of comprehensive income
employees
use it to argue for increase in wages
stakeholder interest of comprehensive income
suppliers
want to check if the business is credible for trade credit
stakeholder interest of comprehensive income
government
need to see how much tax is owed
statement of a financial position
A summary of the value of a firm’s assets, liabilities and capital
assets
components of a balance sheet
resources a business owns
liabilities
components of a balance sheet
debts of a business
non current assets
components of a balance sheet
assets that are long term and are not likely to be sold in a year
current assets
components of a balance sheet
liquid assets, e.g inventory
likely to be sold in a year
current liabilities
components of a balance sheet
debst to be paid back within a year
non current liabilities
components of a balance sheet
long term debts
net assets and liabilities
components of a balance sheet
value of assets and value of liabilities
equity
components of a balance sheet
money owed to shareholders
