Week 10: Form & Content

Question 1

Statement of Comprehensive Income - Expenses need to be classified into four types: (4)

Answer 1

1) Cost of Sales: Production
2) Distribution and Selling Costs: Costs incurred after production of finished goods up to and including transfer of goods to the customers

3) Admin Expenses - Costs of running the
business

4) Other Operating Income - Material income or expenses from ordinary activities not included elsewhere – disclosed separately

Question 2

Cost of Sales

Answer 2

1) Production Costs
2) Costs of items purchased and sold
3) Depreciation on non current assets

Question 3

Distribution costs

Answer 3

1) Warehousing Costs - rent, rates, insurance, utilities
2) Promotion Costs - advertising
3) Selling Costs - salaries (wages) , discounts on sales
4) Transport Costs ( drivers, vehicle costs)

Question 4

Admin expenses

Answer 4

1) Wage costs of admin staff
2) Costs associated with business premises
3) Professional fees
4) Bad debt expenses

Question 5

Other operating income

Answer 5

1) Income from intangible assets : Royalties, commissions
2) Income from Employees
3) Payments for rights to use intangible assets not related to operations - licenses
4) Income from renting out PPE to third party

Question 6

Statement Of Changes in Equity (4)

Answer 6

Reconciles comprehensive income to
movements in equity

• Includes all the gains and losses attributable
  to shareholders for the period including
  changes in accounting policy
• Required because some gains and losses are dealt with through reserves and not the
  current P&L account (e.g. revaluation surplus)
• Shows movements on retained earnings (e.g. dividends)