Identifying the Limitations of Financial Reporting (HSC SSCE Business Studies): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Normalised earnings
Normalised earnings
Earnings adjusted to remove one-off or unusual items
One-off expenses/gains examples
One-off expenses/gains examples
Legal fees, asset sales - don't reflect long-term performance
Capitalising expenses
Capitalising expenses
Recording cost as asset, spreading via depreciation over years
Historical cost
Historical cost
Assets listed at purchase value, not current market value
Intangible assets examples
Intangible assets examples
Goodwill, trademarks, patents, brand names - no physical form
Matching principle
Matching principle
Record expenses in same period as related revenue is earned
Highly geared business
Highly geared business
High debt levels; higher risk but greater profit potential
Gearing ratio shows
Gearing ratio shows
Whether business has high levels of debt
Notes to financial statements
Notes to financial statements
Supplementary details left out of main financial reports
6 financial reporting limitations
6 financial reporting limitations
Normalised earnings, capitalising, assets, timing, debt, notes