Lung tung chap 2 Flashcards
(24 cards)
Major financial acc statements aim?
To provide a picture of the financial position and performance of a business
3 câu hỏi lquan tới 3 statements?
- What cash movements took place?
- How much wealth was generated?
- What is the accumulated wealth of the business at the end of the period and what form does it take?
Typical contents of Annual Reports? (12 cái)
- Financial highlights
- Chairman’s statement
- Business review
- Details of directors
- Directors’ report
- Corporate governance report
- Remuneration committee report
- Auditor’s report
- Income statement
- Statement of financial position
- Cash flow statement
- Notes to the accounts
Financial highlights là chi?
- Summary of main aspects of financial statements
- Usually highlight the positive aspects, ignore the negative aspects
Chairman is a non-executive director. True or false?
True
Chairman’s statement là chi?
- Statement is usually self-congratulatory
Business review là chi?
- Summary of activities of the company (Strategies, customer base, territories)
- Financial performance (Analysis of income and expenses)
- Dividends
- Future outlook
Directors là ai?
Directors are the people running a company on behalf of the shareholders who are the owners
Details of directors là chi?
Shareholders want information about the directors to make sure they have appropriate background and experience to run the company
Directors’ report là chi?
- Required by company law
- Contains financial and non- financial information
Directors’ report required info includes?
- Details of share ownership
- Details of directors’ financial interests in the company
- Employment policies
- Charitable donations
- Political donations
- Assessment of business risks
Corporate governance report là chi?
Corporate governance refers to the rules and practices by which the directors safeguard the interests of a company’s stakeholders, such as shareholders, customers and employees
Mục đích của The UK Corporate Governance Code?
To facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.
Remuneration committee report là chi?
- Shareholders and other interested parties are concerned to ensure directors are not paying themselves too much
- Detailed disclosures are required about how much each named director received, bao gồm salary, fees, pension contributions, shares, other benefits (vd health insurance)
Auditor’s report là chi?
- Need for an independent third party to monitor the information in the annual report
- Auditor checks books and records on a test basis
- Reports to shareholders whether, in the auditor’s opinion, the accounts show a ‘true and fair view’
- Does not guarantee 100% accuracy, but adds credibility to the information
Company accounts là chi?
Similar to any business, but for a company:
- Much stricter rules about format
- Includes auditor’s fee
- Includes corporation tax
- Includes a shareholders’ equity section
Trong IS, cost of sales của retail và manufacturing ?
Retail: Opening inventories + Purchases - Closing inventories = Cost of sales
Manufacturing: Opening inventories + Raw materials + manufacturing wages + manufacturing expenses
- closing inventories = Cost of sales
Grouping types of expenses trong IS?
- Cost of goods sold/ Cost of sales
- Selling and distribution costs (advertising trong ni)
- Administrative expenses
- Accrued expenses (accruals)
- Prepaid expenses (prepayments)
Ownership interest in a company arises in several ways. Equity gồm?
- Direct contributions in form of sale of shares to shareholders
- Certain adjustments, such as revaluation of non-current assets
- Also capital generated from trading, in form of profits which have not been paid out as dividends called ‘retained earnings’
Share premium accounts là gì?
Arise where shares are sold by a company at an amount higher than their nominal value
Có thể issue shares at less than nominal value đc ko?
Ko
Revaluation reserves là gì?
Arise where companies revalue a fixed asset (usually property)
Vd cho unrealised capital gain?
the increase in value is not ‘realised’ until the building is actually sold.
NBV of a building is £200,000, but it has been revalued at £350,000 thì sao?
- Increase non-current asset by £150,000
- Create a new account, revaluation reserve, which shows £150,000
