Accounting Principles

Question 1

How do you analyse a companies financial standing?

Answer 1

Dun and Bradstreet 
Gearing ratio (debt / equity)
How long it's been trading

Question 2

What is a cash flow ?

Answer 2

This is the summary of the actual or anticipated ingoing and outgoing of cash in a company over the accounting period. A cashflow statement measures a company’s ability to pay its short term debts.

Question 3

Relevant legislation for company accounts?

Answer 3

Companies act 2006

Question 4

Why are company accounts relevant

Answer 4

Assessing my company’s strength or that of competitors

Question 5

Management accounts vs. Company accounts

Answer 5

Management - internal, more detailed, no need to be published

Company - required by law

Question 6

Profit and loss vs. Balance sheet?

Answer 6

Profit and loss covers income and expenditure of company and resulting profit or loss over a accounting period.

Balance sheet shows company sets and liabilities at a given point in time.