9706 · 3.1.5
Limited Companies: Financial Statements flashcards
Revision flashcards for Cambridge 9706 Limited Companies: Financial Statements (syllabus 3.1.5). Flip, recall, then mark a real past-paper question.
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What is Share Premium?
An equity account representing the cash received from the issue of shares that is in excess of their nominal (par) value.
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What are Retained Earnings?
The cumulative net profit of a company after accounting for any dividend payments. It represents profits that are reinvested back into the business.
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What is the purpose of the Statement of Changes in Equity (SOCIE)?
To show the detailed movements in each component of the owners' equity (share capital, reserves, retained earnings) from the beginning to the end of an accounting period.
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How are dividends treated in the financial statements?
Dividends are a distribution of profit to shareholders, not an expense. They are shown as a deduction from retained earnings in the Statement of Changes in Equity.
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What is Total Comprehensive Income?
The change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners. It includes profit for the year plus other comprehensive income (e.g., revaluation surplus).
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Where is debenture interest shown in the financial statements?
Debenture interest is a finance cost and is shown as a deduction after 'Profit from Operations' to arrive at 'Profit before Tax' in the Statement of Profit or Loss.
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What is a Revaluation Surplus?
An equity reserve created when a non-current asset is revalued upwards above its carrying amount. It is part of 'Other Comprehensive Income' and is shown in the Statement of Changes in Equity.
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What is the purpose of the Schedule of Non-Current Assets?
To provide a detailed reconciliation of the movement in non-current assets from the start to the end of the period, showing additions, disposals, revaluations, and depreciation. It supports the figure on the SOFP.