The Financial Statements Flashcards

1
Q

Types of income:

A
  • Revenue
  • Other income -> Income that isn’t revenue. For example, profit on sale of an item of property, plant or equipment. Or Rental income
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2
Q

Types of Expenses

A
  • Cost of Sales (The goods/ service they sell)
  • Raw materials
  • R&D
  • Rent
  • Distribution Costs
  • Administrative expenses -> Insurance, wages, advertising etc.
  • Tax expense
  • Finance Costs -> Bank interest
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3
Q

Types of Assets

A
  • Factories
  • Inventory
  • Cash
  • Investments
  • Trade receivables
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4
Q

Types of Liabilities

A
  • Overdraft
  • Trade payables
  • Loan
  • Interest payable
  • Accruals
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5
Q

Types of Equity

A
  • Share capital
  • Share premium
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6
Q

What is a liability?

A

When it is compulsory for the entity to rightfully transfer an economic resources that they owe. There is an obligation to pay cash, re-pay cash and provide goods and services

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7
Q

What is equity?

A

The interest that is left in assets after taking away its liabilities

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8
Q

What is the balance sheet equation?

A

EQUITY = ASSETS – LIABILITIES

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9
Q

What elements would you find under the Statement of Financial Position?

A

Assets, liabilities and equity

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10
Q

What is a current asset?

A

It will be sold or consumed within 12 months. The asset is cash or to be used for trading.

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11
Q

Examples of Current Assets

A
  • Cash
  • Inventory
  • Trade receivables
  • Prepayments
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12
Q

Examples of Non-Current Assets

A
  • Property e.g. office building
  • Plant and Equipment
  • Motor Vehicles
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13
Q

What is a current liability?

A

Will be settled within 12 months. The liability is used in trading and they can’t defer the payment after 12 months

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14
Q

Examples of current liabilities

A
  • Overdraft
  • Trade payables
  • Accruals
  • Interest payable
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15
Q

Are employees an asset to a business?

A

No, because the company doesn’t control its employees

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16
Q

Examples of non-current liabilities

A
  • Bank loan