Account principals and procdures Flashcards
What is a balance sheet?
A statement of assets and liabilities or a business and shareholder equity.
Assets include, cash, inventory, property
liabilities inc. rent, wages, loans
What is a cash flow statement
The movement of money in and out of a business shown as receipts and expenditure.
CFS can help determine whether a company has enough liquidity or cash to pay its expenses
What is a liability
A debt or obligation.
i.e. a loan, mortgages, expenses
What is an Asset?
A resource with economic value to an individual or company.
e.g. real estate
What is Covenant strenght
A tenants ability to comply and observe the covenants set out within a lease.
How is covenant strength assessed?
Institutional profits test. A company must have 3 years of consistent net profit 3x greater than the asking rent.
CreditSafe
Provides a rating assessing the probability of tenant default in a rating from A-E.
71-100= Very low Risk
51-71 = Low Risk
1-29 = High risk
What is included within a set of accounts?
For a LC.
-Company Info
-Directors Report
-Balance Sheet
-Notes
-Accountant Report
-Income Statement / P&L
For a plc inc
-Auditors report
-Governance Report
-Renumeration Report
APP: How are P&L’s structured?
P&Ls show:
Turnover based upon the income lines of the business.
Gross Profit is the total turnover minus the costs of producing the products with the income lines.
Then expenses are calculated including, wages, repairs and maintenance and other costs which are rates, water, phone, etc, vehicles.
The expenses are then taken away from the gross profit to show the net profit figure.
APP: What are the characteristics or a balance sheet and cash flow statement
BS:
A statement of assets and liabilities or a business and shareholder equity.
Assets include, cash, inventory, property
liabilities inc. rent, wages, loans
CF:
The movement of money in and out of a business shown as receipts and expenditure.
