1 - Accounting Principles and Procedures Flashcards
Can you tell me about the Insolvency Act 1986?
- Sets out the laws governing insolvency and bankruptcy for businesses and individuals respectively.
- Only approved people/companies allowed to act as insolvency practitioners
- RICS Surveyors can’t.
Can you tell me about the Companies Act 2006?
- One of the longest pieces of UK Legislation that brings all company based law in to one place.
- Requires registration with Companies House and appointment of Directors etc.
- Requires submission of accounts by the Director on a yearly basis to HMRC.
What is GAAP and what is the purpose of it?
Generally Accepted Accountancy Principles are a set of principles on how to produce company accounts in terms of presentation, content and process so that they are:
- Consistently filed
- Complete
- Comparable
Can you explain the concept of Cashflow and what a Cashflow statement is?
- Cashflow is the movement of cash in and out of a business over a period of time.
- A Cashflow statement shows this movement and projected forecast to help businesses understand any management actions as required, such as investing (positive) or borrowing (negative).
What would you advise a Client if the Contractor became insolvent?
- Secure legal advice
- Secure the site
- Freeze payments
- Take stock of assets, what has been done and what’s left to do
- Start monitoring loss and expense
- Terminate the contract
- Start looking at a revised procurement strategy
What is a profit and loss statement?
Companies financial performance over a year
Revenue – costs = net profit
What is a balance sheet?
A financial snapshot (point in time) showing a company’s liabilities and assets.
Assets = Cash in bank and tangible objects.
Liabilities = Overdraft, loans
What is a cashflow statement?
A cashflow forecast is a document which shows how much money you expect your business or project to receive and pay out over a set period. It can also identify when money will enter and leave a bank account.
What is a financial audit?
An audit is an important term used in accounting that describes the examination and verification of a company’s financial records.
What is insolvency?
Unable to pay debts.
What is liquidation?
Assets are ceased and sold.
What is CapEx report?
Allows the Client to manage their cashflow and keep a close eye on the financial performance of the project
What is capital expenditure?
Capital spent to acquire or improve asset, such as equipment or buildings
What is a Dunn & Bradstreet report?
Business credit check to assess company’s financial position.
