The purpose of the income statement
The purpose of the income statement is to: To give a detailed breakdown of key items shown in the plimary financial statements Show where the business’s cash has come from and where it has been spent Show the revenues, expenses and operating profit for the financial year )- Show, at a particular date, the sources of funds provided to a business by shareholders
and others and how these funds have been used \
\ \. 3.. What is the best definition of a noncurrent asset? Q An asset intended for use on a continuing basis in the company’s activities K: An asset purchased for resale ‘. Expenditure made to fulfill a revenue obligation ‘. 24 months One month k.) Six months 5. What is the principal purpose of charging depreciation on non—current assets? r To ensure that sufficient funds are available to replace the assets \) .[_._‘. To comply Iwith the fundamental concept of prudence
6. Where would ‘changes in accounts payable’ most likely appear on a cash flow statement? .\ .I’ Under cash flows from ‘operafing activities’ and ‘investing acfivities’ .\ .3′ Under cash flows fmrn ‘investing activities’
..‘. Under cash flows from ‘operafing activities’ .\ Under cash flows from ‘investing acfivities’ and ‘financing activities’
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