Financial Statements Flashcards

Vocabulary flashcards for financial accounting terms.

Statement of Comprehensive Income

A financial statement that shows the profit or loss earned by a business for a particular period of time.

Statement of Financial Position

A financial statement presenting a snapshot of a company's assets, liabilities, and equity at a specific point in time.

Statement of Changes in Equity

A financial statement that reports the changes in equity accounts of a company during a particular period.

IAS 1

International Accounting Standards that classify the components of financial statements.

Profit Maximization

The objective of many businesses to make as much profit as possible.

Gross Profit

The profit made on the buying and selling of goods, calculated before deducting operating expenses.

Net Profit

The profit remaining after deducting all expenses from the gross profit.

Trading Account

A section within the Statement of Comprehensive Income that calculates the gross profit of a company.

Profit and Loss Account

A section within the Statement of Comprehensive Income that calculates the net profit or loss of a company.

Opening Inventory

The value of inventory a business has at the start of an accounting period.

Closing Inventory

The value of inventory a business has at the end of an accounting period.

Cost of Goods Sold (COGS)

The direct costs attributable to the production of the goods sold by a company.

Carriage Inwards

An expense relating to the transport of goods purchased by a business.

Carriage Outwards

An expense relating to the transport of goods sold to customers.

Returns Inwards

Goods returned to the business by a customer.

Returns Outwards

Goods that a business returns to the supplier.

Assets

Resources controlled by a business as a result of past events and from which future economic benefits are expected to flow to the business.

Liabilities

Present obligations of the business arising from past events, the settlement of which is expected to result in an outflow from the business of resources embodying economic benefits.

Capital

The funds that the owner of the business invests in the company.

Trade Receivables

The amounts due to a business from its customers for goods or services sold on credit.

Trade Payables

The amounts owed by a business to its suppliers for goods or services purchased on credit.

Non-Current Assets

Assets which are not bought with the intention of resale, and are often used within the business to generate further income.

Current Assets

Assets which are likely to be converted into cash before the end of the current year.

Liquidity

How easily an asset can be converted into cash without any significant loss in value.

Current Liabilities

Obligations expected to be settled before the date of the next statement of financial position.

Non-Current Liabilities

Debts that the business incurs which are not due for repayment until at least after the date of the next statement of financial position.

Working Capital

The difference between current assets and current liabilities.

Statement of Owner’s Equity

A statement that shows how the equity (or value) of the organization has changed during the period under review.

Investments by Owners

Activities that increase the value of the organization.

Distributions to Owners

Activities that decrease the value of the organization.

Stockholder’s Equity

The owner’s equity in a corporation, which includes account titles such as common stock and retained earnings to represent the owners’.