Costs
Start up or running cost: fixtures and fittings
start up
These are costs specifically related to an individual project or the output of a particular product.
direct cost
This financial statement shows the net profit (or loss) of a business over a trading period
Profit and loss statement or income statement
What are the 3 main categories of items on a balance sheet?
assets, liabilities and equity
Name 2 types of intangible assets
Brands, patents, copyrights, goodwill, trademarks, etc
The costs of production that a business must pay regardless of how much it produces or sells.
fixed cost
These are costs that cannot be clearly traced to the production or sale of any single product.
Indirect or overhead costs
What is the term used for "profit" on a not-for-profit entity's statement of profit and loss?
Surplus (or deficit)
What are items of monetary value that are owned by a business called?
assets
What term refers to an estimation of the disposal value at the end of the lifespan.
residual value
The costs of production that change in proportion to the level of output.
Variable Costs
True or False: Direct costs are typically fixed costs.
False: Variable
Does Cost of Sales typically include direct or indirect costs?
direct
What are legal obligations of a business to repay its lenders or suppliers at a later date called?
liabilities
What is the term for the historical cost* of an asset less accumulated depreciation.
Net book value
What is the term for the sum of fixed costs and total variable costs?
Total Cost
What type of cost is rent for a store?
a. direct, fixed
b. direct, variable
c. indirect, fixed
d. indirect variable
A. Direct,fixed
Name one cost that would fall after gross profit and before profit before income taxes on the profit and loss statement.
salaries, rent, advertising, etc
Which section of the balance sheets shows the value of the business belonging to the owners?
Equity
Calculate annual straight line depreciation:
Asset cost: $10,000
Useful Life: 5 years
Residual Value: $5,000
$1,000/year
This line on a cost and output graph stays parallel to the X axis, no matter the output.
What type of cost is insurance for a factory?
a. Direct, fixed
b. Direct, variable
c. Indirect, fixed
d. Indirect, variable
C. Indirect, fixed
Where are dividends recorded on the profit and loss statement?
a. before gross profit
b. after gross profit and before profit before income tax
c. after profit before income tax and before profit for the period
d. After profit for the period and before retained profit
d. After profit for the period and before retained profit
What is the difference between current and non-current with regard to assets and liabilities.
Current will be settled/sold within 12 months. Noncurrent > 12 months.
Calculate the per unit depreciation cost using units of production method:
Asset cost: $10,000
Expected number of units over lifetime: 1,000
Residual Value: $5,000
$5/unit