Accounting Flashcards
Income statement / profit and loss account
Financial statement showing their revenue and expenses during a particular period
Balance sheet / Statement of financial position
Statement of business financial position, showing assets, liabilities and ownership interests
Cash flow
Movement of cash into or out of an account or business or investment
Calculation of income statement
Revenue - expenses
How often is an income statement prepared?
Annually
When is a statement of financial position usually undertaken?
End of financial year
Shows a point in time
Statement of financial position calculation
Assets - liabilities = equity
What is the importance of a cash flow?
Showing how cash is generated and spend during a period of time
Bridge between income statement and balance sheet
Types of cash flow
Operating cash flow
Investing cash flow
Financing cash flow
Explain what get from creditsafe
Turnover
Pre tax profit
Shareholders funds
IFRS 16
Lease accounting standard stating that full cost of leases must be accounted for on the balance sheet
IFRS 16 exemptions
If lease is 12 months or shorter
3 years profit test
Net profit of business must be 3 times the rent for 3 consecutive years
What is meant by ‘covenant strength’?
The strength of the tenant based on their financial performance
Why is it important to assess the covenant strength?
Covenant affects security of their income/ investment
Affects the capital value and investment yield
