Accounting

Question 1

2 key regs for financial reporting

Answer 1

Companies Act 2006

IFRS16

Question 2

What is income statement

Answer 2

Annual summary of income and expenses

To show profit from the year

Question 3

What would be found in income statement

Answer 3

Total revenue

Less COGS

Gross income

Less SG&A costs

Operating Income

Less Tax, interest, debt, etc

Leaves profit

Question 4

What is a Balance sheet

Answer 4

Statement of asset and liabilities

‘What is owned vs what is owed’

Question 5

What are non current/intangible assets vs current/tangible assets

Answer 5

Non current - illiquid, cannot be sold in a year. Or services, copyright, brands, etc

Current/tangible assets - physical assets which can be sold

Question 6

What is IFRS16

Answer 6

New accountancy standard for leases

For leases over 12 months

Occupier’s obligation to pay should be accounted as a liability

Question 7

What companies need to do annual reports and what is included

Answer 7

Public companies

1. Strategic Report - Statement from chair/CEO, business plan, etc
2. Governance - audit, risk control, remuneration
3. Financial statements
   Income statement and balance sheet, audits report, cash flow statement, notes

Question 8

What are some accounting ratios

Answer 8

Debt ration: Debt to equity ratio

Profit margin (profit/revenue)

Current ratio = Current assets to current liabilities ratio