Accounting & Business Flashcards
What did you learn in your Accounting (CPD) training?
Object of accounts: provide info on business financial position. Balance Sheets and P&Ls
What is a balance sheet?
- Statement of a business financial position
- Shows assets and liabilities at a given date.
What is a P&L?
- Summary of business income and expenditure, usually annual
- Shows whether profit is made.
Cash flow statement?
Shows actual receipt and expenditure inclusive of VAT (whether the business generated cash)
What are current and non-current assets?
Current- converted to cash within 1 year.
Non-current- not likely to be converted to cash within 1 year e.g. property, trademarks
What are current and non-current liabilities?
Current- owed within a year
Non-current - long term financial obligations e.g. mortgages
What is the difference between Management Accounts and Audited (Company) Accounts?
- Management- internal use only
- Audited- prepared by Chartered Accountant
- Statutory- Mandatory for limited companies, generically formatted and requested by HNMRC
What is UK GAAP
UK Generally Accepted Accounting Principals. Valuations for inclusion in financial statements.
Why is it important to assess the covenant strength?
- Affect on perception of risk
- Determine surety based on financial positioning
What can you use to assess covenant strength?
D&B report
What would you find on a Dun and Bradstreet Report?
Summarises companies financial position and rates them and applies a maximum credit recommendation.
Best Rating: 5A1- Institutional grade
How do you communicate covenant strength to the client?
How the covenant can be be perceived and include report.
Where is the Net Profit found in the financial accounts?
On the P&L (income Statement)
