3.4 Final account Flashcards
Include the exam theory part
Appropriation account
Final section of a P&L account and shows how the next profit after interest and tax is distributed.
Balance sheet
Financial information on an organization’s assets, liabilities and the capital invested by the owners on one specific day, thus showing a ‘snapshot’ the firm’s financial situation.
Book value
The value of an asset as shown on a balance sheet.
Cost of goods sold(COGS) = Cost of sales (COS)
Represents the direct costs of producing or purchasing stock that has been sold.
Depreciation
The fall in the value of fixed assets over time, from wear and tear or obsolescence.
Final accounts
The published annual financial statements that all limited liability companies are legally obliged to report.
Fixed assets
Items owned by a business, not intended for sale within the next twelve months, but used repeatedly to generate revenue for the organization.
Goodwill
Intangible asset which exists when the value of a firm exceeds its book value.
Gross profit
Difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to its customers.
Historic cost
the purchase cost of a particular fixed asset.
Intangible assets
fixed assets that do not exist in a physical
form.
Net assets
show the value of a business by calculating the value
of all its assets minus its liabilities.
Net profit
The surplus that a business makes after all expenses have been paid for out of gross profit.
The profit and loss account ( or income statement)
Financial record of a firm’s trading activity over the past 12 months, consisting of three parts: the trading account, the P&L account and the appropriation account.
Reducing balance method
Method of depreciation that reduces the value of a fixed asset by the same percentage each year throughout its useful life. This is the more realistic method to use.
