Commerce Accounting Part 2

Terms Definitions, Usage/Information

Income Statement (Profit & Loss/ Financial Performance)

Reports income and expenses, determining annual profit

Statement of Financial Position

Reports assets, liabilities, owner's equity.

Service Business

Provides, actions to customers, intangible goods

Trading Business (Retail)

Sells inventory/stock, tangible goods

Depreciation

Long term assets wearing out or becoming obsolete

Depreciation Equation

Cost - Residual Value/

Useful Life

Residual Value

Estimated amount an asset is can be sold for at the end of its use

Administrative Expenses

General expenses for a business

Who would be interested in a [business’] financial statements

Competitors, Potential Investors, Suppliers, Government & Local Council (taxes)

Distribution/Specialty (Service/Retail)

Expenses specific to the business and its expertise, Expense of distributing goods

Finance Cost

[Interest Paid]

Statement of Financial Position

Measure, assets , liabilities, equity at ONE point in time

Current Assets

Assets that will be used/turned into cash with the accounting period

Non-Current Assets

Assets that will provide economic benefits beyond the accounting period

Investment Assets

Money invested long term for future income

Property, Plant and Equipment

Assets with long term use that will provide income for more than a year

Intangible Assets

Intangible long term assets