Accounting Flashcards

1
Q

What is the difference between a profit and loss account and a balance sheet?

A
  • A profit and loss account shows the incomes and expenditures of a company and the resulting profit or loss.
  • The balance sheet shows what a company owns (assets) and what it owes (liabilities) at a given point in time.
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2
Q

What are the key financial statements that all companies must provide?

A
  • Profit and loss account
  • Balance sheets
  • Cash flow statements
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3
Q

What is the difference between debtors and creditors?

A
  • Creditors Your firm owes another firm money e.g. If you owe a sub consultant fees then they are a creditor.
  • Debtors A firm who owes your firm money e.g. a client who owes you fees is a debtor.
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4
Q

What is a cash flow statement?

A
  • It is the summary of the actual or anticipated ingoing and
    outgoing of cash in a firm over the accounting period.
  • It is broken down into operating, investing and financing activities.
  • ︎It measures the short term ability of a firm to pay off its bills.
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