Accounting Principles Flashcards
What is UK GAAP and what is included?
One of two available accounting standards in the UK (as per Companies Act 2006). GAAP is regulated by the FRC in UK&I and provides six financial standard documents for companies to comply with when producing their financial statements. FRS 102 in particular provides guidance on the preparation of P/L accounts, cash flow statements and balance sheets.
Name some ratios relating to financial statements
Gearing ratio - debt-to-equity ratio - shows a business is financing its operations in terms of risk
Quick ratio - curent assets / current liabilities - indicates the company’s ability to instantly use its near-cash assets (assets that can be converted quickly to cash) to pay down its current liabilities