Accounting Principles

Question 1

1. What is a balance sheet, profit and loss and cash flow statement

Answer 1

a. Balance sheet – shows the financial position of a company and states the assets and liabilities
b. Profit and loss – shows income and expenditure reported annually
c. Cash flow – actual receipts including VAT

Question 2

2. What is included within company’s financial results?

Answer 2

a. Chairmans statement
b. Auditors report
c. Profit and loss account
d. Balance sheet
e. Corporate governance report
f. Remuneration report

Question 3

3. What is a balance sheet?

Answer 3

a. Statement of financial position showing assets and liabilities at the end of financial year

Question 4

4. What is included in assets?

Answer 4

a. Cash, property, debtors, investments

Question 5

5. What is included in liabilities?

Answer 5

a. Loads, overdrafts and creditors

Question 6

6. What is a profit and loss account?

Answer 6

a. Shows income and expenditure on an annual basis

Question 7

7. What is a cash flow statement

Answer 7

a. Cash flow – incoming and outgoing money using actual receipts including VAT

Question 8

8. What are the ratings in Red Flag report?

Answer 8

a. Gold – very low risk
b. Silver – Low risk
c. Bronze – Fair trade risk
d. Red flag 1 – high risk
e. Red flag 2 - Very high risk
f. Red flag 3 – very high risk and insolvency probable

Question 9

9. What are the ratings in Dun and Bradstreet report?

Answer 9

a. 2 ratings, one on financial risk and the other on risk factor
b. Financial risk - 5A down to H
c. Risk factor from 1 (minimal risk) down to 4 Significant risk