DFS Revision Game
Comments
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The objective is to give the user a true and fair view of the position of the company at the given date.Distribution- not sure why though.
What is the objective of financial statements accoreding to the framework for the preperation and presentation of financial statements?
Can't think of anything else to say about it.
I have just wasted a full day reserved for my study by just sitting here and doing everything wrong on what I tried, not because I don't know, but because I can't focus, so I decided to see if I got a bottle of wine left in the fridge and have another go tomorrow...
Easy question: What is the ratio for creditor days.
Edit: the good and the bad news is we got a bottle of wine left in the fridge (well not anymore to be fair) so time to start a relaxing night.
(If I do show up here again tonight and start making absolutely no sense it's the alcohol....)0 -
ooooo I hope Rachel is only poorly from too much AAT?!
Creditor days are : trade creditors/purchases or cogs x 365
Here's a question I am confused about....
EPS = Profit afer Tax / no. ordinary shares issued (weighted average).
Now is the profit after tax, operating profit minus tax, or do they mean net profit (profit for year) ie. after interest and tax? (BBP goes on about profit after tax and then states the forumla as net profit/no ordinary shares issued!)
If it is operating profit minus tax why not after interest???
any contributions welcome!!!0 -
ooooo I hope Rachel is only poorly from too much AAT?!
Creditor days are : trade creditors/purchases or cogs x 365
Here's a question I am confused about....
EPS = Profit afer Tax / no. ordinary shares issued (weighted average).
Now is the profit after tax, operating profit minus tax, or do they mean net profit (profit for year) ie. after interest and tax? (BBP goes on about profit after tax and then states the forumla as net profit/no ordinary shares issued!)
If it is operating profit minus tax why not after interest???
any contributions welcome!!!
You can never get too much AAT!! Hahaha. Just got a migraine but i'll survive :-)
Your point on earnings per share... I'm share earlier in the thread I was confused as to which 'profit' to use in the equation. However, i'm still not sure exactly but even if I use the wrong figure, so long as I use the correct bottom figure and can talk about the findings ill be ok.
I believed it was profit AFTER interest and tax. I don't think i've actually been taught that or even read it, i just assumed, which I wouldn't advise. The share holders are only really bothered about the very bottom figure, which will get distributed out to them. If you use profit before tax and say the profit is £1000 but then deduct tax of £950, there is only £50 left to your shareholders. So why would you use the profit before tax to calculate earnings per share?
I genuinely dont know the answer to which 'profit' figure to use and really cannot be bothered getting my books out the car, so i thought i'd air my opinions and hope they make some kind of sense. Even if I am using the wrong figure I still think it's the one that SHOULD be used, but when have the AAT ever made sense!!!0 -
Rachel thank you for your analysis and thought processes, I agree with it all.
I hope your achy head is going.
I will get to the bottom of this! Our lecturer is pretty damned spot on and he will know and have a good explanation too.... I'll mail him tormorrow.
Toodle pip for now.0 -
Right, I'm trying to get into studying this morning by just slowly starting up, because either I'm still tipsy from last night or my hangover consists of making me feel dizzy.... maybe 3 o'clock was a bit late to go to bed....
Anyways on the subject of the earnings per share, I got it down as profit after tax as well. Which means on the income statement, I use the figure called profit after tax, which already has the finance costs removed from it.
So I looked it up in my book to see if I can find some more information, and there is a note that says that the profit used is the amount attributable to the ordinary equity holders, after allowing for tax, non-controlling interests and dividends on preference shares.
So according to my book it is profit after tax, minus non-controlling interests or dividends on preference shares.0 -
why don't they just state profit available to shareholders / equity partners /for the year(or which ever is your favourite!), surely it is 'after everything' - as it is what the company has earned (it may not be given to the shareholders of course!).
I'll get to the bottom of this! Off to do a consolidated income statement for now - fun fun fun fun!!!
Anyone going to ask a question?0 -
I am actually looking forward to the reply from your tutor though!
And since you ask:
Q why do I keep making the same mistake in my consolidated SoFP?
or an easier one, which I think we had before already.
What are the elements of the financial statements?0 -
Question 1) because you keep stopping to make a cup of tea, text someone, put the washing machine on, walk the dog, watch the tele etc...?
Question 2) liabilities, assets, income, expenses and equity.0 -
Question 1) I wish, instead I got the boyfriend nutty enough to make the tea, the cat is asleep on the bed all day already, I did the laundry yesterday and the tele isn't on.Question 1) because you keep stopping to make a cup of tea, text someone, put the washing machine on, walk the dog, watch the tele etc...?
Question 2) liabilities, assets, income, expenses and equity.
Question 2) right, do we get a new question now?0 -
why do we add back depreciation on reconsillyation from operating profit to to cash used in/from ops?0
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why do we add back depreciation on reconsillyation from operating profit to to cash used in/from ops?
We add back depreciation as it is not a cash flow item. There is no actual cash involved, it is a method used to calculate the current value of assets and the income statement is adjusted accordingly.
Q Whats this asset turnover malarky?0 -
measures efficiency of the use of resources available to co.
fall may be caused by purchase non current assets or revaluation, increased stock, increased debtors or decrease in sales.
Different types of business will have very different assetturn ratios.eg supermarket few assets (no trade debtors) high revenue will have high figure, engineering business costly noncurrent assets lower sales will have much lower figure.
I'm off up the wooden hill now! Hope that boyfriend has cooked your dinner and cat has vacated bed for you!0 -
Not sure what the malarky is about, but asset turnover is revenue/ net assets (non-current assets + current assets - current liabilities).
it shows how well your assets have been used during the period. However in days I got no clue, so I don't know about that. The ratio has no set standard, as a lot depends on the type of business.
An increase in the ratio indicates a greater efficiency.
A decrease indicates a fall in revenue or an increase in net assets. The fall in revenue may be negative, but if it is an increase in net assets, it could just be that the company revalued their non-current assets or that the company has invested in some new assets.
If the change is mainly in the current assets, it might mean poor debt collecting skills, a very high stock, due to less sold etc or creditors are all of a sudden paid (too) early.
Q what are the definitions of income and expenses?0 -
Income is an increase in economic benefit in the accounting period resulting from inflows, reduction in liabilities and appreciation of assets resulting in higher equity other than contributions from equity partners. It includes both revenue from the ordinary activities of the business and gains such as disposal of non current assets which are not shown in revenue.
Expenses are reduction in economic benefit in the accounting period resulting from outflows, degradation of assets and incurring of libilities resulting in reduction in equity other than that from distributions to equity partners. Expenses include costs from the normal course of business such as cogs, wages and depreciation. Losses on disposal of non current assets or disasters such as fire and flood are included, commonly shown separately in the financial statements.0 -
Don't know if anyone is interested anymore! but our lecturerer confirmed EPS is profit after interest (borrowing costs) and tax.
What is the definition of IAS8?0 -
I'm not sure what you mean with the definition. IAS 8 deals with accounting policies and changes if I'm not mistaken, but I got no clue what definition you are afterDon't know if anyone is interested anymore! but our lecturerer confirmed EPS is profit after interest (borrowing costs) and tax.
What is the definition of IAS8?
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I should have asked what the definiton of accounting policies is, sorry!0
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Oh, I don't know!
But the examinator decides to ask that in the exam, I'll just babble a bit away that the accounting policies are the accounting bases set up by the directors to be followed by the company to ensure consistency within the company.
Any suggestions are welcome!
Q Give some examples of non-adjusting events after the SoFP date...0 -
Oh, I don't know!
But the examinator decides to ask that in the exam, I'll just babble a bit away that the accounting policies are the accounting bases set up by the directors to be followed by the company to ensure consistency within the company.
Any suggestions are welcome!
Q Give some examples of non-adjusting events after the SoFP date...
Sorry i've been away for a while, i've been poorly sick but still had to go to work for month end!! So i've been at deaths door! (a bit extreme i know, haha)
Well, IAS 8 was the accounting policies one. I remember a question something along the lines of...
Q Is changing the depreciation method fom straight line to reducing balance a change in accounting policy or estimate? And the answer should have been a change in estimate, an example of a change in policy would be from charging NO depreciation to charging depeciation.
I can't physically write about it at the moment due to my nasty head but hopefully the example explains a bit.
Non-adjusting events after the SoFP date.....
A fire or flood? The reason i wouldnt adjust is because it should be covered by insurance?
Staff strikes? A loss may occur but is currently unknown.
Any other examples welcome. I believe issue of shares is a non adjusting event but not sure why.
Q Why is issue of shares a non adjusting event? Or is it?0 -
Issues of shares is a non-adjusting event, if it happens after the date of the year end. Because it doesn't affect the figures for the current year.Sorry i've been away for a while, i've been poorly sick but still had to go to work for month end!! So i've been at deaths door! (a bit extreme i know, haha)
Well, IAS 8 was the accounting policies one. I remember a question something along the lines of...
Q Is changing the depreciation method fom straight line to reducing balance a change in accounting policy or estimate? And the answer should have been a change in estimate, an example of a change in policy would be from charging NO depreciation to charging depeciation.
I can't physically write about it at the moment due to my nasty head but hopefully the example explains a bit.
Non-adjusting events after the SoFP date.....
A fire or flood? The reason i wouldnt adjust is because it should be covered by insurance?
Staff strikes? A loss may occur but is currently unknown.
Any other examples welcome. I believe issue of shares is a non adjusting event but not sure why.
Q Why is issue of shares a non adjusting event? Or is it?
For adjusting events you think about settlement of a court case which started before the year ended. (Present obligation/ provisions). Revaluations of assets/ stock etc.
For non-adjusting events you think about the issue of shares, a big investment, things like that, it doesn't affect the figures.
Q when does something classify as an operating lease?0 -
Issues of shares is a non-adjusting event, if it happens after the date of the year end. Because it doesn't affect the figures for the current year.
For adjusting events you think about settlement of a court case which started before the year ended. (Present obligation/ provisions). Revaluations of assets/ stock etc.
For non-adjusting events you think about the issue of shares, a big investment, things like that, it doesn't affect the figures.
Q when does something classify as an operating lease?
When it's leasing term is less then the useful life of the asset. An operating lease is different to a capital/finance lease as it is generally short term and is not shown as an asset in the balance sheet.
The lease costs are written off the income statement. The asset on lease is not owned by the company and all repairs etc required are the responsibility of the company leasing the item to them.
I'd use the terms lesee or lessor or whatever they are but i usually get them wrong!!
Q When does something classify as a finance lease?0 -
When it's not a financing lease! ie. all of the risks and rewards of ownership of the asset do not transfer to the lessee.0
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Q When does something classify as a finance lease?0
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When there are more risks involved, the lease is more specific for the company and is not leased out to several other companies.
Q - where do the associated profits from a company go into the financial statements of accounts of the aquiring company.0 -
When there are more risks involved, the lease is more specific for the company and is not leased out to several other companies.
Q - where do the associated profits from a company go into the financial statements of accounts of the aquiring company.
I'm just guessing here, the other comprehensive income bit?0 -
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Hope you feel better soon Rachey!I'm just guessing here, the other comprehensive income bit?
As for the profit from associated companies. I thought the dividends received etc went just above the profit before tax on the income statement.
I'm a bit in doubt about it still though. Need to check my notes at some point! I meant to do more study yesterday night, but instead spent the evening making the hopefully last changes to my project.
Q Can anyone confirm if Rachey and me are correct?0 -
Is it in the retained earnings section?0
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