Accounting Principles Flashcards
Differences between Limited Company, Public Company, Partership and Sole Trade
Dun & Bradsheet Report
Insolvency / Liquidation / Administration
Liquidity Ratio
Profitability Ratio
Financial Gearing Ratios
Difference between profit & loss account and a balance sheet
Long term liability vs current liability
Long term is debt owed over a year
Current - owed within a year
Current and non current asset
Current = one that can be converted to cash within a year
Non-current = less liquid and harder to generate cash
What are the key financial statements that companies provide?
Profit and loss accounts
Balance sheets
Cash flow statements
What is the difference between management and financial accounts?
Management accounts are for the internal use of the management team
Financial accounts are the company accounts that are required by UK law
What is the difference between a profit and loss account and a balance sheet?
A profit and loss account shows the incomes and expenditures of a company and the resulting profit and loss
The balance sheet shows what a company owns (it’s assets) and what it owes (it’s liabilities) at a given point in time
What is a cashflow statement?
It is the summary of the actual or anticipated ingoing and outgoing of cash in a firm over the accounting period
It measures the short-term ability of a firm to pay off its bills
Define: Capital Allowances
Tax relief on certain items purchased for the business e.g. tools and equipment
Define: Sinking funds
Funds that are set aside for future expenses or long-term debt
Define: Insolvency
An inability to pay debts where liabilities exceed assets
Define: Companies House
An agency that incorporates and dissolves limited companies within the UK
Define: HMRC
His Majesties Revenue and Customs
