8.1 Accounting Analysis Flashcards
What is an independent auditor’s report?
Are the statements true and fair?
- auditors can qualify the accounts
What does it mean if auditors qualify accounts?
That company is not giving fair and true representation of performance
What are the notes to the accounts?
Directors making notes to accounts
- explanations
What is shareholder information
- information shareholders may be interested in
eg. new share issues; has share cap increased?
What are 4 reports to analyse corp. performance?
- strategic report
- stakeholder review
- financial review
- directors remuneration
What does statement of financial position show?
- assets
^ what company owns - capital
- reserves
- liabilities
^where money came from
What are accounting standards?
- prescribes form and content of financial statements
What is GAAP?
Generally accepted accounting principles?
Is GAAP standardised globally?
No - in process of standardisation but can still be country specific
Why may it be difficult to compare international companies?
Due to the range of accounting standards across the world, it can be difficult to compare companies internationally
What is IASB?
international accounting standards board
- purpose: to achieve transparent and comparable financial statements to global accounting standards
What are 2 set of standards under IASB?
- IFRS (international financial reporting standards)
- IAS (international accounting standards)
What is an additional listing rule for companies listed on exchanges (eg. LSE)?
Must provide an interim report
What is the other equation instead of assets = liabilities + equity
Non-current assets + Current assets = Capital + Reserves + Liabilities
What is another term for equity?
Capital and reserves
What are non-current assets?
intangible (goodwill etc)
tangible (PPE)
Investments helf for LT
What are current assets?
Cash and cash equiv
inventories
trade receivables
Other current assets (eg. prepayments)
What are capital and reserves?
- share capital
- share premium
- revaluation reserve (some assets appreciate over time, opposite of depreciation)
- retained earnings
What are current liabilities?
Short term borrowings (<1yr)
- trade and other payables (trade payables, accruables)
What are non-current liabilities?
long term borrowings/provisions (>1yr)
long term bank loans
bonds issued by company