Chapter 3-4 Final Accounts

This set of flashcards covers key concepts and terminology from the Chapter 3-4 final accounts lecture, helping to clarify the purposes of various financial statements and the interests of stakeholders.

Final Accounts

Financial statements compiled by businesses at the end of an accounting period.

Stakeholders

Individuals or groups with a vested interest in the success of a business.

Income Statement

A financial statement reflecting a company's revenues and expenses, showing profit or loss over a specific period.

Gross Profit

Revenue minus the cost of goods sold.

Net Profit

Profit after all expenses, taxes, and interest have been deducted from total revenue.

Cost of Sales

Direct costs attributed to the production of goods sold by a company.

Retained Profit

The portion of profit not distributed as dividends but retained for reinvestment.

Liabilities

Legal debts owed by the business to external parties.

Assets

Resources owned by a business that have economic value.

Equity

The value of the owners' interest in the business, calculated as assets minus liabilities.

Intangible Assets

Non-physical assets that provide value, such as patents and trademarks.

Patents

Exclusive rights granted to inventors to manufacture or sell their invention.

Goodwill

The established reputation of a business, valued as the premium paid during acquisitions.

Dividends

Payments made to shareholders from a company’s profits.

Share Capital

The total value of shares issued by a company.

Accounting Equation

Assets = Liabilities + Equity, reflecting a firm's financial position.