Final accounts Details

Question 1

Examples of internal stakeholders

Answer 1

-Owners/shareholders
-Managers
-Employees

Question 2

Examples of external stakeholders

Answer 2

-Pressure groups/Unions
-Suppliers
-Government
-Bank
-Media
-Competition
-Customers

Question 3

Format of a statement of profit or loss

Answer 3

Question 4

Format of a statement of profit or loss(for non-profit social enterprises)

Answer 4

Question 5

Examples of expenses

Answer 5

-Rent
-Advertising
-Lighting
-Administrative staff salaries
-Transport

Question 6

In statements of financial position/balance sheets, net assets and equity must always be equal(T/F)

Answer 6

True

Question 7

Examples of current assets(in statements of financial position)

Answer 7

-Cash
-Debtors
-Stock

Question 8

Examples of current liabilities(in statements of financial position)

Answer 8

-Overdrafts
-Trade creditors
-Short-term loans

Question 9

Examples of non-current assets(in statements of financial position)

Answer 9

-Buildings
-Machinery and equipment
-Vehicles

Question 10

Examples of non-current liabilities(in statements of financial position)

Answer 10

-Borrowing(long-term)
-Mortgage

Question 11

In statements of financial position, depreciation is accounted for for non-current assets(T/F)

Answer 11

True

Question 12

Formula for total equity

Answer 12

Total equity = Retained earnings + Share capital(for-profit only)

Question 13

Examples of intangible assets

Answer 13

-Patents
-Copyright
-(Registered) trademark
-Goodwill

Question 14

Format of a statement of financial position

Answer 14

Question 15

Elements in a statement of profit or loss

Answer 15

Sales revenue → Cost of sales → Gross profit → Expenses → Profit before interest and tax → Interest → Profit before tax → Tax → Profit for the period → Dividends(if applicable) → Retained earnings

Question 16

Elements in a statement of financial position

Answer 16

Non-current assets → Current assets → Total assets → Current liabilities → Non-current liabilities → Total liabilities → Net assets → Total equity

Question 17

Causes of depreciation of non-current assets

Answer 17

-Wear and tear
-Equipment not up to latest standards(i.e. obsolescence)

Question 18

Ways to calculate depreciation

Answer 18

-Straight-line method of depreciation
-Units of production method of depreciation

Question 19

Formula for straight-line method of depreciation

Answer 19

Question 20

Formula for units of production method of depreciation

Answer 20

Question 21

Advantages of the straight-line method of depreciation

Answer 21

-Easy to calculate and apply
-Complete value of the asset is accounted for in the scrap value so the full value is accounted for

Question 22

Disadvantages of the straight-line method of depreciation

Answer 22

-Assumes that the asset is used evenly throughout its life
-Depreciation figures may not be accurate in certain cases where the useful life or scrap value cannot be predicted

Question 23

Advantages of the units of production method of depreciation

Answer 23

More realistic and accurate for many types of assets

Question 24

Disadvantages of the units of production method of depreciation

Answer 24

More complex to calculate

Question 25

Formula for contribution per unit

Answer 25

Contribution per unit = Price per unit - Variable cost per unit

Question 26

Formula for margin of safety

Answer 26

Margin of safety = Current level of output - Break-even quantity

Question 27

Formula for break-even quantity

Answer 27

fixed costs ÷ contribution per unit

Question 28

Formula for profit (at a certain level of output)

Answer 28

(Output × contribution per unit) – fixed costs

Question 29

The break-even point is where...

Answer 29

total revenue = total costs