Accounting

Question 1

What is GAAP

Answer 1

Generally accepted accounting principles, procedures & standards. They must be followed by companies and accountants

Question 2

What are some of the principles of GAAP?

Answer 2

Regularity, continuity, consistency, sincerity, non-compensation, prudence, periodicity, materiality, good faith and utmost good faith

Question 3

What is the format of a company accounts:

Answer 3

Chairman’s statement, independent auditors report, income statement, statement of financial position, corporate governance report, other

Question 4

What is a balance sheet (statement of financial position)?

Answer 4

It shows a businesses assets and liabilities. The difference between the 2 is equity

Question 5

What is an asset?

Answer 5

Something a company owns, they can be fixed or current

Question 6

What is a liability?

Answer 6

Something a company owes. Including loans, overdrafts, borrowing

Question 7

What is an income statement (profit + loss account)

Answer 7

Shows a company’s income and expenditure, produced annually

Question 8

What is the structure of a profit + loss account?

Answer 8

Revenue, cost of goods sold, operating expenses, operating profit, non operating income and expenses, earning before tax and interest, interest and tax, net profit, earnings per share

Question 9

What is a cash flow statement?

Answer 9

Tells us how much money is running through a business at anytime

Question 10

What is the important change?

Answer 10

IFRS16 is the lease accounting standard that companies must comply with when using the International Financial Reporting Standard. It is that the full cost of the lease must be accounted for on a balance sheet/statement of financial position