understanding financial statements Flashcards
1
Q
balance sheet
A
- financial position at a point in time through resources and claims (cumulative)
- depicts assets chosen, how they were financed, other investing activities
2
Q
assets
A
- present economic resource controlled by an entity as a result of past events, and produces economic benefits
- financed by liabilities and/or equity
3
Q
current assets
A
benefits realised in the next 12 months from balance sheet date
4
Q
non-current assets
A
used to generate long-term revenue an realised over a longer period
5
Q
liabilities
A
- present obligations/debt of an entity to transfer an economic resource as a result of past events
- transaction not recorded as a liability if cash has not been received/service has been performed
6
Q
current liabilities
A
paid within one year from balance sheet date
7
Q
non-current liabilities
A
remain liabilities for at least the next year
8
Q
owner’s equity
A
- funds retained within a business
- excess of assets over liabilities
9
Q
equity consists of
A
- share capital (directly invested in company)
- retained profits (cumulative profits retained in business rather than distributed as dividends)
10
Q
accounting equation
A
A = L + OE
11
Q
income statement
A
- financial performance over a period of time
- how effective a company is at generating profit from operating activities
12
Q
revenue
A
increase in company’s wealth arising from the provision of goods and services
13
Q
expense
A
decreases in a company’s wealth that are incurred in order to earn revenue
14
Q
cost of goods sold
A
cost company paid for goods that customers have bought
15
Q
link between BS and IS
A
net profit that is added to retained profits as equity
