Accounting Flashcards
What are GAAP ?
General Accounting Standards - Set of accounting and reporting standards, which govern how companies’ accounts and financial reports should be prepared in UK.
What are GAAP’s requirements?
Submission of balance sheet, Profit & Loss account, Statement of Total Recognized Gains & Losses. STRGL
What is IAS ?
International Accounting Standards - Set of internationally agreed principles and procedures relating to the way how companies present their accounts. They are used by listed companies within EU. UK listed company may use UK standards for its subsidiary company.
What are IAS’ requirements?
Submission of Income Statement, Statement of Financial Position (Balance sheet), Statement of Change in Equity, Statement of Cashflows, Notes to the Financial Statement.
What are Management Accounts?
Accounts used for the internal checks by the management team.
What are Company Accounts?
The accounts required by law, which are submitted once a year to HMRC.
Can you explain Income tax?
Income tax is paid by sole trader or Partnership levied on the earned profit made during the year.
Can you explain Corporation tax?
Corporation tax is paid by a limited company based on the company’s profit for a particular year.
What VAT stand for?
Value added tac is paid by companies, which turnover is over 85k. The amount of paid and charged VAT must be reported to HMRC. This is done through VAT returns, which is due every 3 months.
What is cashflow?
Cashflow is the movement of money in and out. It can be used to forecast and for monitoring. Cashflow can be planned and actual.
What is included in Cash Flow Statement ?
- Cash Flow from Operations (CFO),
- Cash Flow from Investing (CFI),
- Cash Flow from Financing (CFF).
What is credit control?
Invoicing management to make sure billing is done on time, avoiding bad debtors, chasing invoice payments, assessing payment procedures.
What are the main types of taxes in the UK?
- Income tax – This a tax on people’s income. The basic rate of income tax is 20%, paid on income over the income tax threshold of £10,400.
- National insurance contributions - National Insurance contributions are a tax on earnings paid by employees and employers and help to build your entitlement to certain state benefits, such as the State Pension and Maternity Allowance.
- Consumption tax – VAT (Value added tax) – Value added tax, or VAT, is the tax you have to pay when you buy goods or services.
- Excise duties - Excise Duty is a tax that is designed to discourage the purchase of particular goods. Excise Duty is an indirect tax. (For example on tabacco products or spirits)
- Corporation tax – tax on company profit - Corporation Tax in the UK is a tax that limited companies need to pay on their profits (20%).
- Stamp duty – tax on buying houses/shares”
What are key financial statements that all companies must provide?
Profit & Loss account, Balance sheet, cashflow
What is the difference between Profit & Loss Account and Balance Sheet?
Profit and Loss Account shows company’s income, expenditure, profit or loss over given period of time, whilst Balance Sheet shows what the company owns (Assets) and what it owes to others (Liabilities) at a given point of time.
