Chapter Two Flashcards
(16 cards)
Where does the information contained in the financial statement come from?
The general ledger account
What is the statement of financial position?
A snapshot Of the business at one point
What does the statement of financial position show?
What a business owns and what it owes
What does the asset section of the statement of financial position contain
Noncurrent assets and current assets
What is the liability section made up of on the financial position?
Current abilities which are amounts of business owes that must be paid within a year and also non-current liabilities which our amount of business owes that are due to be paid in more than a year
What is the capital of section made up of in the financial position statement?
The capital section is made up of cash injected by the owner plus the profit the business is made less any drawings the owner has taken
What are the two main times of non-current asset?
Tangible assets and intangible assets
What are tangible assets?
Asset which have a physical substance for example, property, plant and equipment
What are intangible assets?
Assets which do not have a physical substance for example licenses and brands
What makes up the statement of profit and loss?
Sales revenue, gross profit, expenses, profit
What is gross profit?
The profit from businesses trading activity
What is discount received?
Prompt payment discounts the business has received from suppliers
What goes under expenses in a statement of profit and loss?
The businesses overheads
What is the cost of goods sold calculated as?
The opening inventory(or the goods the business purchasing their last period but didn’t) plus(all the goods for sale that the business has brought in this period) less closing(all the good of business has brought but not yet sold)
What is the capitalisation policy?
The businesses policy for determining when expenditure are non-current assets is capitalised
What elements do you need to categories the financial statements in?
Asset liability capital income and expenses
