Financial Statements
Reference: Chapters 1 & 4
FINANCIAL STATEMENTS
Income Statement
(Statement of Financial Performance)
Balance Sheet
(Statement of Financial Position)
FINANCIAL STATEMENTS
continued
Income statement
MERCHANDISING
OPERATIONS
MERCHANDISING
OPERATIONS
Profit measurement process for a
merchandising business
Sales
revenue
Less
Equals
Cost of
goods sold
Gross
profit
Less
Operating
expenses
Equals
Profit
(loss)
8
$ 36 000
17 200
320 000
356 000
40 000
316 000
Operating expenses
Selling expenses
Administration expenses
Financial expenses
10
Operating revenue
Sales revenue
Gross sales revenue
$480 000
Less: Sales returns and allowances
(20 000)
Net sales revenue
460 000
Less: Cost of goods sold
(316 000)
Gross profit
144 000
Other operating revenue
Rent revenue
$15 000
Interest revenue
9 000
168 000
Operating expenses
... Continued on next slide
11
Operating expenses
Selling expenses
Sales salaries & commission expense
$45 000
Advertising expense
16 000
Freight-out
8 000
Rent expense store space
7 000
Depn expense store equipment
5 000
$81 000
Administration expenses
Office salaries expense
19 000
Electricity expense
4 000
Rent expense office space
10 000
Depn expense office equipment
3 000
Insurance expense
2 000
38 000
Financial expenses
Interest expense
2 000
Discount allowed
4 000
6 000
(125 000)
Profit before income tax
43 000
Less: Income tax expense
(12 900)
Profit after tax
$ 30 100
12
13
Balance sheet
14
200
1 000
550
4 960
$21 910
Liabilities and equity
Liabilities
Accounts payable
$ 2 500
Interest payable
50
Revenue received in advance
800
Salaries payable
1 200
Bank loan
5 000
Total liabilities
$ 9 550
Equity
Share capital
10 000
Retained earnings 31/10/08
2 360
15
Total equity
12 360
$21 910
Statement of changes in
equity
Statement of changes in
equity continued
WONG PTY LTD
Statement of Changes in Equity (extract)
as at 31 October 2010
Profit
$ 2 860
Retained earnings 1/10/10
0
Dividends
(500)
Retained earnings 31/10/10
$ 2 360
17
Minimum disclosures:
Assets
Cash assets
Trade and other
receivables
Other financial assets
Inventories
Investments in property
Property, plant and
equipment
Tax assets
Intangible assets
Liabilities
Trade and other payables
Financial liabilities
Tax liabilities
Provisions
Equity
Capital and reserves
Retained earnings or
accumulated losses
18
Non-current assets
Non-current liabilities
20