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Follow up questions

1. Is 356 the net asset or total asset for IVAN at the end of the year?
2. We need to convert Land and OX into common currency because ___________
3. Total plough consumption for IVAN is___________ of which the value which is lost
purely because of damage is _________
4. Value of Land in Income Statement is NIL because_________
5. For IVAN, the withdrawal from business which would not have affected business
performance were equals to_______
6. The conceptual difference between 214 and 194 in case of IVAN is_________
7. For Fredrick, the plough maker would not arise in the closing resource list because __
8. Is it fair to say that plough maker arise in IVAN list because the plough has been
broken?
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Balance Sheet (includes Assets, Liabilities and Equity)
 It is the statement of financial position of business as at particular date

Assets Liabilities and Equity

1.Property, Plant & Equipment 1.Share Capital
Long Term Risk
Long Term
2.Intangible Assets finances 2.Reserves
Capital
Capital
Non-
operational
3.Investments Structure
3.Long term loan Borrowed
4.Prepaid expenses Short Term 4.Short term loan
capital

finances
5.Inventory (Stocks) 5.Accounts payable
6.Accounts Receivables 6.Advanced received
Short Term Operational
7.Cash & Bank obligations 7.Unearned revenue
8.Accrued expenses

Equity refers to shareholders’ interest in the assets of the company after subtracting payments required for
outsiders’ liabilities. Therefore, it is also referred to as Net Assets.

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Basic Construct of the Income Statement

Particulars
Sales

Basic
trade
(Less) COGS (All direct expenses)

Operating
Gross Profit
(Less) Marketing Expense

Business
expense
(Less) Administrative/ General Expense
(Less) Distribution Expense
EBITDA
(Less) Depreciation / Amortisation
EBIT
Operating
Non-

(Less) Interest (Finance Cost)

(Add) Non Operating Income
EBT
(Less) Income Tax Expense
PAT or Net Income
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Cash Flow Statement

Cash Flow Statement provides information about sources and uses of cash of the
firm.
It provides information to assess firm’s liquidity, solvency and financial flexibility.

 Cash flows are classified into the following Net Cash Flow
categories: during the year

1. Cash flow from operating activities (CFO)

2. Cash flow from investing activities (CFI)
3. Cash flow from financing activities (CFF)

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Let us summarize the case

1. Money Measurement
2. Long term asset versus Short term assets
3. Depreciation versus Impairment
4. Land as a special case
5. Reason for origination of Liability
6. Expenses vs Appropriation of Profit
7. Profit versus Retained Earnings
8. Connection between Income Statement and Balance Sheet