Statements of Comprehensive Income and Financial Position Flashcards
Statement of Comprehensive Income
SOCI shows the trading position of the business which is used to calculate gross profit.
It then takes into account all of the expenses to calculate the profit or loss for the year
Accrual
Accrual is when an expense is paid after the period to which it relates
Prepayment
When an expense is made in advance of the period to which it takes
Statement of Financial Position
SOFP provides a snapshot of the net worth of a business at a particular moment in time, normally at the end of the financial years.
It is a summary of everything a business owns (assets) and everything it owes (liabilities)
Non-current assets
Items of value that are owned by the business and likely to be held
for more than one year e.g. premises and fixtures & fittings.
Current assets
Items of value that are owned by the business whose value is likely to fluctuate on
a regular basis e.g. inventories, trade receivables, prepayments, cash in the bank and cash in hand.
Current Liabilities
Things owed by the business that must be repaid within a 12-month period e.g.
overdrafts, accruals and trade payables
Non-Current Liabilities
Non-current liabilities are things a business owes that will take longer than one year to repay
e.g. mortgages and bank loans.
Depreciation
An accounting concept used to spread the cost of an assets over its useful l life.
Assets appear on the statement of financial position at a realistic value (net book value) and the annual monthly amount by which the assets are depreciated is included as an expense on the statement of
comprehensive income
Straight-Line Depreciation
Asset is depreciated by a set amount each year
Reducing balance depreciation
Asset is depreciated by a set % of its remaining value each year.
The percentage will be set by a depreciation senior account and means that the asset will be depreciated by a lower amount as it ages.
