Lecture 7

Question 1

Retained profit calculation

Answer 1

Closed retained earnings = opening balance + net profit - dividends

Question 2

What does the balance sheet show?

Answer 2

Companies financial position at a specific point in time

Question 3

Give two examples of current assets

Answer 3

Cash, trade receivables, inventory

Question 4

Give two examples of non-current assets

Answer 4

Property, vehicle, patents

Question 5

Two examples of current liabilities

Answer 5

Trade payable, dividends payables

Question 6

What’s included in equity?

Answer 6

Share capital retained earnings

Question 7

How is retain earnings calculated?

Answer 7

Opening retained profit + net profit - dividends

Question 8

What makes an asset recognisable under IASB rules?

Answer 8

Right to benefit, economic inflow likely, control exists, measurable

Question 9

What qualifies a liability for recognition?

Answer 9

Present obligation, from past event, likely outflow of resources, measurable

Question 10

What shows the balance sheet “balances”

Answer 10

Every pound of asset must be financed by liabilities or equity

Question 11

Definition of balance sheet

Answer 11

The balance sheet a.k.a. statement of financial position shows a companies assets, liabilities and equity at a specific point in time.
It reflects the company financial health, not performance overtime