Definitions of Components of financial statements

Question 1

Revenue/income

Answer 1

Primary source of income eg sales or fees

Question 2

Sales Returns

Answer 2

A negative income-subtract from sales

Question 3

Distribution Costs

Answer 3

Expenses incurred in transferring ownership of finished goods to the consumer. Those expenses incurred through the promotion, storage, selling and delivery of the inventory for sale

Question 4

Cost of goods sold

Answer 4

expenses incurred in acquiring

Question 5

Administrative Expenses

Answer 5

Expenses are costs associated with the administration of the entity as a whole.

Question 6

Finance costs

Answer 6

Arise from financing its operations from external sources. Finance Costs are limited interest paid on borrowing.

Question 7

Current asset

Answer 7

Assets that will be turned into cash or used up within the next accounting period.

Question 8

Non current assets

Answer 8

Any asset that is not a current asset

Question 9

Current liability

Answer 9

Any liability that must be repaid within the next accounting period

Question 10

Non current liability

Answer 10

Any liability that is not a current liability

Question 11

Equity

Answer 11

The residual interest in the assets of the business after deducting all liabilities. e.g. A-L= Eq

Question 12

Advanced definition of current assets

Answer 12

it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
it holds the asset primarily for the purpose of trading;it expects to realise the asset within twelve months after the reporting period; or
it is cash or a cash equivalent

Question 13

Property, plant and equipment

Answer 13

equipment are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and
are expected to be used during more than one period.

Question 14

Advanced definition of current liability

Answer 14

A entity shall classify a liability as current when:
it expects to settle the liability in its normal operating cycle it holds the liability primarily for the purpose of trading to be settled within twelve months after the reporting period or the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

Question 15

Investments

Answer 15

All investments, such as shares, stock, term deposits.

Question 16

Intangible assets

Answer 16

These assets you cannot touch but generate income for the business. e.g. goodwill, copyrights or trademarks