Accounting

Question 1

What is a Joint Venture

Answer 1

Commercial alliance between two or more separate entities that allows them to share risk and award.

New business is created to which each party contributes resources such as land, capital, property, skills, credentials.

Question 2

When are Joint Ventures used?

Answer 2

Enable smaller companies to deliver large projects by combining they expertise and resource
To gain local knowledge overseas
Large company acquire resources from specialist

Question 3

What is a PFI

Answer 3

Financing public sector projects through the private sector.

Alleviate government and taxpayers of immediate burden of raising the capital for these projects.

Private company handles the up-front costs instead of the government.

Project leased to the public, and the government authority makes annual payments to the private company.

These contracts are typically given to construction firms and can last as long as 30 years or more

Question 4

Profit and Loss Account/Income Statement:

Answer 4

Historical record of the trading of a business over a specific period (normally one year).

Difference between the firm’s total income and its total costs

Question 5

Gross Profit

Answer 5

Difference between Revenue and Cost of Sales

Question 6

Cash Flow

Answer 6

Summarises amount of cash entering and leaving company.
Show management of cash - meaning how well the company generates cash to pay its debts obligations and fund its operating expenses