Accounting Principles Flashcards
What are the key financial statements as part of the Companies Act 2006
Profit and Loss Statements
Balance Sheets
Cashflow Statements
What is the difference between Balance Sheet and Profit and Loss Statement
Profit and Loss Statement shows the incomes and outgoings of a company showing a profit or loss
The balance sheet shows what a company owns (assets) and what it owes (Liabilities) at a point in time
What is Capital Allowances and Sinking Funds
Capital Allowances are tax relief on certain items purchased for the business.
Sinking funds are funds set aside for futures expenses or long term debt.
What are Liquidity Ratios
Liquidity ratios measure a companies ability to pay of its current liabilities by converting its current assets into cash.
A good ratio is normally around 1.5 and 0.75 is an early sign of insolvency.
Why do chartered surveyors need to understand company accounts.
To aid in preparing their own business accounts.
For assessing the financial strengths of contractors and those tendering for contracts.
For assessing competition.
What is the difference between creditor and debtors?
Creditors are business that are owed money by another that they have extended credit to. Eg providing a service they owe money for.
Debtors is when you owe money for a service.
What is a financial statement
Forecasts of income and expenditure that can be used as an analytical tool to identify shortfalls and surpluses
How would you carry out a credit check?
You can use credit safe to access a company’s accounts
Considering both the group accounts and company accounts
If the credit rating is low, you calculate some key ratios and pass the information on
