Accounting Principles and Procedures

Question 1

What is a balance sheet?

Answer 1

A financial statement that reports a company’s assets, liabilities and shareholder equity at a specific point in time.

Question 2

What is a profit and loss account?

Answer 2

A financial statement that summarises revenues, costs and expenses incurred during a specified period (usually quarterly or annually).

Question 3

What is a cash flow statement?

Answer 3

A financial statement that summarises the movement of cash that comes in and out of a company. It measures how well a company manages its cash position and how well it generates cash to pay debt obligations.

Question 4

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

Answer 4

Request that the tenant provides at least 3 years of audited accounts with a net profit of at least 3 times the rent.