Lecture 10 Flashcards
accounting information system = ?
- information identification
- information recording
- information analysis
- information reporting
major financial statements aim to do what?
provide a picture of financial position and performance of a business
businesses produce which 3 statements on a recurring basis?
statement of cash flows
statement of profit & loss
statement of financial position
together, the financial statements provide an overall picture of…?
the financial health of the business
what is the expanded accounting equation?
assets = equity +/- profit/loss + liabilites
OR
assets = equity + revenue - expenses + liabilities
what is the income statement layout?
sales revenue
(less)
cost of sales
(equals)
gross profit
(less)
operating expenses
(equals)
operating profit
(less)
interest payable
(plus)
interest receivable
(equals)
profit for the period
what is the expanded trading account layout?
sales revenue
(less)
cost of sales:
opening inventory + purchases - closing inventory
(equals)
gross profit
how do you calculate cost of sales?
opening inventory + purchases - closing inventory
what is the standard layout for the statement of financial position?
non-current assets
(plus)
current assets
(equals)
total assets
equity
(plus)
non-current liabilities
(plus)
current liabilities
(equals)
equity plus liabilities
what is the alternative layout for the statement of financial position?
non-current assets
(plus)
current assets
(equals)
total assets
(minus)
non-current liabilities
(plus)
current liabilities
(equals)
total liabilities
(equals)
equity
how do you calculate equity?
total assets - total liabilities
is equity the same as net assets?
yes
what is the standard layout and alternative layout for the SOFP characteristics?
standard is assets = equity + liabilities
alternative is assets - liabilities = equity
what are examples of operating expenses?
salaries & wages
rent & rates
heat & light
telephone & postage
insurance
motor vehicle running expense
depreciation expense
what are examples of non-current assets?
property
plant & equipment
motor vans
