Accounting – An Introduction
Summary ch. 2,3,6,7 & 14
Chapter 2 | Measuring & reporting financial position
+ Knowledge Clip “Financial Statements & Annual Report”
Major financial statements
Balance sheet
statement of financial position: what is the accumulated wealth of the business at the end of a certain period?
Income statement
profit & loss account: how much wealth (profit) was generated/lost by the business over a certain period?
Cash-flow statement
what cash movements (in/out) were made by the business over a certain period?
Relationships
Balance Sheet
assets of business on one hand, claims against business on other hand
Assets
Characteristics of Assets
business has right to control the resource
probable future monetary value (use in company / hire / sale)
benefit must arise from some past action / event (asset already bought before, not in future)
asset must be measurable in monetary terms
Types of Assets
property plant & equipment
fixtures & fittings patents & trademarks
trade receivables / debtors (able to pay!) investments
inventory cash
tangible assets (e.g. machines) & intangible assets (e.g. patents)
Summary ch. 2,3,6,7 & 14
Chapter 2 | Measuring & reporting financial position
+ Knowledge Clip “Financial Statements & Annual Report”
Major financial statements
Balance sheet
statement of financial position: what is the accumulated wealth of the business at the end of a certain period?
Income statement
profit & loss account: how much wealth (profit) was generated/lost by the business over a certain period?
Cash-flow statement
what cash movements (in/out) were made by the business over a certain period?
Relationships
Balance Sheet
assets of business on one hand, claims against business on other hand
Assets
Characteristics of Assets
business has right to control the resource
probable future monetary value (use in company / hire / sale)
benefit must arise from some past action / event (asset already bought before, not in future)
asset must be measurable in monetary terms
Types of Assets
property plant & equipment
fixtures & fittings patents & trademarks
trade receivables / debtors (able to pay!) investments
inventory cash
tangible assets (e.g. machines) & intangible assets (e.g. patents)
