Accounting Principles and Practice

Question 1

What might you find in a public limited company accounts? ( 4 Points)

Answer 1

• Chairman Statement
• Auditor Report
• Profit and Loss Account
• Balance Sheet

Question 2

What is the purpose of a Balance Sheet

Answer 2

Shows the assets and liabilities of a business at a given date ( normally financial year end)

Question 3

When is Savills Financial Year End

Answer 3

December but produce half year statutory accounts

Question 4

Examples of an Asset

Answer 4

Cash, Property, Debtors and Other Investments Held

Question 5

Examples of Liabilities

Answer 5

Borrowings, Overdrafts and Loans

Question 6

What is a Profit and Loss Account

Answer 6

Summary of the business’s income and expenditure transactions

Question 7

What is the purpose of a P & L Accounts

Answer 7

Informs stakeholders of a business’ performance by income, costs and profit.

Question 8

Why is a Cashflow Statement Important

Answer 8

Helps determine financial health of a company as you need cash to pay suppliers etc.

Question 9

What is a Cashflow Statement

Answer 9

A financial statement that shows how the cash of business was generated and spent during to include VAT

Question 10

What is IFRS 16 and what is its purpose

Answer 10

• International Financial Reporting Standards new accounting standard for Lease
• It changes the way occupiers account for their leases and could change how they negotiate their leases

Question 11

Ways of analysing business performance? ( 6 Points)

Answer 11

• Earnings per share
• Dividend yield
• Return on assets
• Liquidity
• Gearing (equity vs. debt)
• KPIS

Question 12

What is a statutory account?

Answer 12

Geared towards external stakeholders e.g P & L, Balance Sheet so include things like :
- Earnings per share (EPS)
- KPI’s
- EBIT

Question 13

What is a management account?

Answer 13

Geared towards internal stakeholders, include things like:
- Divisions
- Staff costs as a percentage of income
- Marketing costs as a percentage of income