Chapter 9
What does the balance sheet show?
Assets, liabilities and equity
Cost of sales, sales promotion costs, cost of premises, vehicle running costs and staff costs are costs for the company. All these accounts therefore have a ... balance.
Debit
Name all 4 reporting classes
class A class B class C class D
What is the main purpose of financial statements for the year?
Legislative requirements – information for stakeholders
Internal financial management
Give 2 examples of a necessary start-up asset
Ex. vehicles, inventory, cash, fixtures and fittings, tools, and equipment
How are reporting classes measured and when can companies move up/down from a class?
Measured by the Balance Sheet, net revenue, and no. of employees
Have to fulfil 2/3 of the measures of another class for 2 consecutive years
What is the recording of vouchers called?
Bookkeeping
Name all stakeholders
Employees, customers, suppliers, lenders, public authorities, shareholders
What is an overview of the link between the chart of accounts and the financial statements called?
Account structure
Explain the difference between depreciation and accumulated depreceation, and which financial statements they each can be found in
Depreciation is amount of value an asset loses over during a specific period (one year etc.) - Income statement
Accumulated depreciation is the total amount of value of depreciation recorded for an asset from the time it was acquired until present date - Balance sheet
What is an audit opinion, and which reporting classes have to be audited?
An audit opinion explains the contents of the audit and its conclusions.
Companies in reporting classes B, C and D must have their annual reports audited by one or more state-authorised or registered accountants.
A company buys a laptop for 10,000 DKK, which is paid for by its bank account.
Is the asset account debited or credited?
Both.
Bank deposits (asset account) are reduced by DKK 10,000 and are therefore credited
Fixtures/fittings and equipment (also asset account) are increased by DKK 10,000 and are therefore debited
Explain the purpose of preparing a trial balance
To verify that the total debits equal total credits