Lesson 1, Chapter 3 Flashcards
(9 cards)
What are the two main financial statements?
• Statement of Financial Statements
• Statement of Profit or Loss (SPL)
What are the statement of financial position (sfp)?
• Is a snapshot of a business’s financial position at a point in time.
What are the Statement of Profit or Loss (SPL)?
• Is a summary of the performance of a business, highlighting profits or losses that has been generated over a period (usually a year).
• The SPL calculates the profit or loss during a year by subtracting business expenditures from business income.
What are the Elements of the Financial Statements?
• Statement of Financial Position
• Statement of Profit or Loss
What are the Statement of Financial Position?
• Assets
• Liabilities
• Capital
What are the Statement of Profit or Loss?
• Income
• Expenditures
What are the Accounting Equation?
Capital = Assets - Liabilities
What is the Statement of Profit or Loss Equation?
• The Statement of Profit or Loss relates to the profit of a business, which we introduced when learning about income & expenditures
Profit = Income - Expenditures
What is the Net Assets Equation?
Net assets = assets - liabilities
Or
Net assets = capital
And:
Opening net assets