Chapter 1 - Published Financial Statements Flashcards
What is the SFP?
A summary or list of all assets, liabilities and equity at the end of the AP
What is a non current asset?
An asset acquired for long-term use and not resold as part of a trading activity e.g buildings, vehicles, plant and machinery
What is a current asset?
Those assets that are expected to be realised by the business in the normal operating cycle, usually a period or less e.g., inventories, receivables
What are non current liabilities?
Those liabilities which will be repaid more than 12 months from the reporting date e.g., long term bank loan
What are current liabilities?
Those liabilities which will be repaid within 12 months from the reporting date e.g., bank overdraft, trade payables, current taxation
What is equity?
The residual interest in the assets of the entity after deducting all of its liabilities. Comprises share capital and reserves
What is the accounting equation?
Assets = equity + liabilities
What is the carrying amount?
Cost - accumulated depreciation
What are retained earnings?
Represents accumulated profits earned over the years - dividends paid to shareholders
What is revaluation surplus?
If an entity chooses to revalue their non-current assets to reflect market value, the revaluation surplus shows the value of the increase in those assets
What are loan notes/ redeemable preference shares?
Represent the value owed to debt investors (as opposed to equity investors who acquire share capital). Entity receives money from investors and investors receive interest or dividends and their capital at an agreed date.
Is there an obligation to return the orginal sum invested for loan notes/redeemable preference shares?
Yes - there liabilities
What are lease liabilities?
Amount due after more than one year under a lease agreement
What is deferred tax?
The liability arising due to a difference in the accounting treatment and the tax treatment of some items in the financial statements
What are trade and other payables?
Accruals, VAT
