Accounting principles Flashcards
What is a staement of profit and loss?
A document which shows the amount of income generated against the expenses made during a specified period.
What is a cashflow statement?
A financial statement that shows all the cash inflow a company receives from operations and external investment. It also shows cash outflow that pays for business activities during a given period.
What is a balance sheet?
It is a snapshot of a companies financial status showing the assets, liabilities, shareholders equity at any given point.
Give me some examples of how you forecast your individual fee income.
Take one years income, multiply it by growth rate
Give me some examples of the subject areas of the RICS guidance on Conflicts of Interest.
Record Keeping
Information Barriers
Party Conflicts
Informed consent
What is the difference between a profit and loss statement and a balance sheet?
A profit and loss shows the income and expendatures of a company and resulting profit or loss.
The balance sheet shows what a company owns (assets) and what it owes ((liabilitis) at any given point.
What do companies need to provide every year to comply with the Companies Act 2006?
Accounts for the company at the end of each financial year
What is accounting?
It is the process of keeping financial accounts of something.
What are company accounts?
Legal requirement submitted to HMRC. It is a record of the companies financial performance
What are management accounts?
These are produced for internal usage for particular requirements such as calculating acquisitions. It can be in any format for the purposes of what it is needed for.
How do you deliver healthy cashflow?
Ensure cash coming in is greater than that going out.
What does a Dun and Bradstreet report show?
It compiles business information to measure the creditworthiness of a company. They are the business equivalent of a credit report check. It will colour code the companies financial status from green, red or orange/yellow to show their risk.
What are the limitations of a Dun and Bradstreet Report?
It is limited only to the latest submitted documents on companies house.
Why do companies keep accounts?
For regulatory purposes, to keep track/record of outgoings and in goings and compare performances and to plan future growth.
How are fee proposals prepared?
A fee proposal is prepared using an estimate of the time required to carry out a job multiplied by the cost of your hire on an hourly rate. A percentage will then be added for company overheads.
What is goodwill?
An intangible asset that arises when a buyer acquires an existing business. It represents assets that are not separately identifiable.
What is bankruptcy?
The legal process where people or companies who cannot repay debts may seek relief from the government of their debt. It is court ordered. It stays on your financial record for up to 10 years
What is receivership?
The process in which a ‘receiver’ is appointed by a creditor to liquidate company assets to allow creditors to recoup their money.
What is retention and why do we keep this?
Retention is the withholding of a percentage of a contract sum to ensure the contractor properly completes the activities required
What is solvency?
the possession of assets in excess of liabilities; ability to pay one’s debts.
