Accounting Principles Flashcards
What is the difference between a profit and loss account and a balance sheet?
P+F shows income and expenditure
BS shows assets vs liabilities
What are the key financial statements that all companies must provide?
Profit and Loss, Balance Sheet and cash flow statement
What is a cash flow statement?
Summary on the actual or anticipated ingoing and outgoing of cash in a firm over the accounting period.
Why do chartered surveyors need to understand and be able to interpret company accounts?
- Internal reviews
- Analysis of accounts for valuation purposes
What is the purposes of a profit and loss acount?
Monitor and measure profit or loss
Compare financial years
Assist in forecasting
Calculating tax
What is the difference between debtors and creditors?
Creditors - your firm owes another money
Debtors - a firm who owes you money
What are financial statements?
Forecasts of income and expenditure can be used as an analytical tool to identify potential shortfalls and surpluses.
What are balance sheets?
Shows the value if everything the company owns, owes and is owed.
Shows the value of the business at any given point
What are signs of insolvency within company accounts?
Low credit rating or working capital
