Accounting and Principles Flashcards
What is a cashflow statement?
A financial statement that provide data on a companies incomes and outgoing during a given period of time.
What is a Profit & Loss statement?
- A financial statement demonstrating a companies profit or loss at a given period of time.
What is a balance sheet ?
- A financial statement showing what a company owns (assets) and what a company owes (liabilities) at a given point in time.
- The value of a company
What advice would you give to your client if a company went bust?
- Secure the site and materials
- make sure materials are labelled in clients name
- insure the site and works
What is an income statement?
- Shows a companies income, expenditure and profit
How would you identify signs of insolvency?
- Low credit rating
- Figures on companies house may show they have taken on more contract than they can resource/deliver.
What is your understanding of the Construction Act 2009?
- It is in place to ensure payments are made promptly throughout a supply chain, and any disputes are resolved swiftly.
What is the difference between Gross & Net profit?
- Gross Profit = Revenue - Cost of goods
- New profit = Gross profit - expenses in tax
- Operating costs = wages, utilities, insurances
What is financial account for, and what is included?
- Record and provide accounting information to external users
- Used for limited companies annual reports
Includes:
- Income statements
- balance sheets
- Cashflow statements
- Directors reports
- Auditor report
What is capital expenditure?
- Fixed assets intended for long term use
- Benefits the businesses long term use, such as machinery etc.
What is Revenue expenditure?
- Short term benefits such a utilities, bills etc.
What are the two types of Equity & liability?
Equity:
- Shared capital: Finance received by owners
Liabilities:
- Non-current: Loans not due within 12 months
- Current: Monies owed within 12 months
Why do you need to know about accounting within your role?
- If I were to set up my own business, I would need an understanding of the accounts.
- To be able to assess competition
- Assessing financial strengths of tendering contractors.
What is cashflow, and how can you improve it?
- Is the movement of cash in and out of a business overtime.
- Can be improved by delaying expenditure, postponing payments and improve planning.
What is credit?
How can you control it?
- Giving a client an extended period of time to pay for services.
- Identify if the client has good credit score, carry out due diligence on the client.
