Income Statement
What are the two sections of the Income Statement called?
Profit and Loss Section
This Statement shows the relationship between what?
Assets, liabilities and Capital
A rule which sets down how the financial activities of a business are recorded
Accounting Principle
What is the main aim of starting a business?
Generating a profit
Gross Profit
Selling price of goods – Cost of sales
What is calculated in the trading section?
Gross Profit
Name the two types of assets
Current and Non-current
This means that the business is treated as being completely separate from the owner of the business
Business Entity
What are the two components of Financial Statements
Income Statement and Statement of Financial Posiiton
Cost of Sales
Opening inventory + Purchases – Closing inventory
If carriage inwards was paid on PURCHACES what should we do with the amount?
Add it to purchases value
Assets are arranged in -------- order of Liquidity
Increasing (low to high)
Means that the accounting records are maintained on the basis that the business will continue to operate for an indefinite period of time.
Going Concern
What affect does drawings have on the Capital Account
Decrease (debit)
Profit for the year
Gross profit + Other income –Expenses
In the Income Statement Carriage outwards is classified as?
Name the two types of Non-Current Assets
Tangible and Intangible
The buying of one single pen will not be recorded separately because of
Materiality
This includes all the legal costs, carriage inwards and installation costs for a non-current asset
Capital Expenditure
Too lazy to think of another formula
Bonus points I guess
What effect will a LOSS for the year have on the Capital account
Reduce (Debit)
Trade receivables is an example of?
Current Asset
Revenue is only regarded as being earned when when the legal title (ownership) passes from seller to buyer
Realisation
This includes money received in day-to-day operations such as sale of goods, fees from clients ,rent received, commission received, discount received and so on
Revenue Receipt
Net Purchases
Purchases – Purchases returns + Carriage inwards – Goods for own use