Accounting Principles Flashcards
What is accounting
Accounting is the recording of financial transactions along with storing, sorting, retrieving and summarising various reports and analysis
What is a cash flow statement?
Is a financial statement that provides aggregate data regarding all cash inflows and outflows that a company partakes in.
What is a profit and loss statement?
Refers to a financial statement that summarises the revenues, costs, and expenses incurred during a specified period: usually quarterly or yearly.
What is a balance sheet?
A financial statement that reports a company’s assets, liabilities and shareholder equity at a specific point in time.
What is capital expenditure?
Funds used by a company to acquire upgrade and maintain physical assets.
What types of profit are there?
Gross profit
Net profit
Profit before tax
Profit after tax
What is VAT?
Value added tax - a consumption tax on goods and services that is levied at each stage of the supply chain where value is added
What are the VAT types?
Full tax - 20%
Reduced tax - 5%
Exempt - 0%
What is insolvency?
When a individual or company can no longer meet their financial obligations to lenders as debt become due.
What are the main types of ratio analysis used?
Liquidity ratios
Cash flow ratios
What are the key financial statements that all companies must provide?
Balance sheets
Income statements
Cash flow statements
Statements of owners equity
What does a DCR show?
Debt cover ratio = Net Operating income / annual debt obligations
What is included in a company account?
Profit and loss account
A balance sheet signed by a director on behalf of the board
What is an audit?
An official inspection of an organisations accounts
What is a liability?
A form of financial payment / burden a company owes to another party
