Accounting principles and procedures

Question 1

What is the difference between balance sheets, cash/income statement sheets, cash flow statements and profit and loss accounts?

Answer 1

Balance Sheets: financial statement which states assets, liabilities and equities of the company at a given time.

Income Statement: Revenue and expenses which = net profit or loss

Cashflow Statement= The movement of cash/equivalents entering and leaving a company over a given time.

Question 2

Whats an Asset / liability?

Answer 2

Asset= something that adds value such as cash, property, machinery, copyrights

Liabilities= Something that decreases value such as debt, wages owed, taxes, IFRS16 (rent)

Question 3

What is the basic “profits test” that you apply when considering affordability to a prospective tenant?

Answer 3

A typical profits test would be for the tenant to provide 3 years’ audited accounts showing a net profit of, say, 3 times the annual rent

Question 4

what is UK GAAP

Answer 4

Generally accepted accounting principles. UK implementation of IFRS

Question 5

What is IRFS 16

Answer 5

An obligation to pay rent has to be included on the balance sheet. (less than 12 month tenancies)

Question 6

IAS16?

Answer 6

international accounting principles part 16

Property plant and equipment on the balance sheet