Definitions of Components of Financial Statements Flashcards
What is the definition of Revenue/Income?
The Primary source of income e.g. sales or fees.
Definition of Sales Returns?
A negative income - from sales.
What are Distribution Costs?
Distribution costs are expenses incurred in transferring ownership of finished goods & services to the consumer. Those expenses incurred through the promotion, storage, selling and delivery of the inventory for sale.
What are costs of goods sold?
They are expenses incurred in a acquiring the goods for sale.
What are Administrative Expenses?
Administrative expenses are costs associated with the administration of the entity as a whole.
What are Finance Costs?
Finance costs arise from financing its operations from external sources. Finance Costs are interest paid on borrowing.
What is a Current asset?
An Asset that will be turned into cash or used up within the next accounting period.
What is a Non-Current Assets?
Any Asset that is not a Current Asset.
What is a Current Liability?
Any Liability that must be re-paid within the next accounting period.
What is a Non-Current Liability?
Any Liability that is not a Current Liability.
What is an Equity?
Equity is the residual interest, in the Assets of the business, after deducting all Liabilities
E.g. A-L=E (Assets-Liabilities=Equity)
What is the Law’s definition of a Current Asset?
An entity shall classify an asset as current when:
A)it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
B)it holds the asset primarily for the purpose of trading;
C)it expects to realise the asset within twelve months after the reporting period; or
D)it is cash or a cash equivalent (as defined in NZ IAS 7).
What is the Law’s definition of a Current Liability?
A entity shall classify a liability as current when:
A) it expects to settle the liability in its normal operating cycle;
B) it holds the liability primarily for the purpose of trading;
C) the liability is due to be settled within twelve months after the reporting period; or
D) the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
Definition of (Property, Plant and Equipment)
are tangible items that:
A) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
B) are expected to be used during more than one period.
What are Investments?
All investments, such as shares, government stock and term deposits.
