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.
2
Q
What are the key financial statements that all companies must provide?
A
- Profit and loss account
- Balance sheets
- Cash flow statements
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.
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.