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Flashcards in Chapter 1: Financial Statements Deck (12)
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4 types of Financial Statements

1. Financial position (balance sheet)
2. Income
3. Changes in equity
4. Cash flows


Balance sheet reports three items:

Assets, liabilities and shareholders equity


Assets divided into two categories:

1. non-current assets - assets will not be sold, consumed or converted into money during the next year
2. current assets - expected to be sold, consumed or converted into money within 1 year or production cycle


Liabilities into two categories:

1. non-current liabilities - assure outflow of economic benefits in more than a year
2. current liabilities - expected to be redeemed within 1 year


Shareholders equity consists of:

Share capital - money invested by shareholders
Retained earnings - capital retained within company


First accounting formula:

Assets = Liabilities + Shareholder's Equity


Income statement

Reports revenues and expenses of an organisation for a time period
Result - net income or net loss


Income statement order

Cost of sales
1. Gross profit
R&D expenses
Selling, general and administrative expenses
Other operating expenses
2. Operating profit
Finance income and expense
3. Profit before income tax
Income tax expense
4. Net profit


Statement of Other Comprehensive Income

Presents overview of unrealised company results. Other changes in values, not accountable to equity also taken into account


Second accounting formula:

Reveues - Expenses = Net Income
+- Other comprehensive income = Total comprehensive income


Statement of Changes in Equity

Repurchasing of shares and dividend payouts, transactions between organisation and shareholders


Statement of Cash Flows reports cash flow of:

1. Operating activities
2. Investing activities
3. Financing activities