Summary Grade 11 Accounting - Partnerships: Interpretation of financial statements
6 views 0 purchase
Course
Accounting
Institution
11th Grade
I am really passionate about accounting.
These notes will really help you to understand the theory behind the work that you are doing. It will enable you to see the bigger picture, and surely improve your grades.
Happy studying!
Chapter 8 –
Partnerships:
Interpretation
of financial
statements
LEARNERS SHOULD BE ABLE TO:
Analyse and interpret financial statements and notes.
Revise the following:
• Gross profit on sales
• Gross profit on cost of sales
• Net profit on sales
• Operating expenses on sales
• Operating profit on sales
• Solvency ratio
• Current ratio
• Acid test ratio
Calculate and analyse the following:
• Stock turnover rate
• Stock holding period
• Average debtors’ collection period
• Average creditors’ payment period
• Debt equity ratio (gearing)
• Partners’ earnings
• Return on partners’ earnings
, Introduction
Financial reporting: Analysis and interpretation of
- focuses mainly on aspects financial statements:
reporting on the financial - is an evaluation process, aimed at
position and the financial results evaluating the current and previous
of the business. financial position and results of the
business.
Purpose of analysis and interpretation of financial statements
Make informed decisions
and estimates about future
position and results of the
business.
Limitations on financial information should be kept in mind when estimates about the
future are made. Some of these limitations are:
Financial statements are historical documents.
Inflation is not taken into account.
Other information such as technological changes, changes in consumer preferences,
economical environment, tendencies in the business sector and changes in the
business should also be taken into account.
Users of financial information
External users Internal users
• Investors: interested in the • Management: used to determine if all
profitability, financial position and sections were run effectively.
financial stability of the business. • Internal financial analysts: provide
• Short-term credit providers: information to management for
interested in the liquidity of the decision-making purposes.
business.
• Long-term credit providers:
interested in the solvency ratio of the
business.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ansunestolk1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.92. You're not tied to anything after your purchase.
