Accounting Principles and Procedures

Question 1

Management accounts vs. Financial accounts

Answer 1

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Question 2

Profit and loss statement vs. Balance sheet

Answer 2

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Question 3

What are Cash flow statements?

Answer 3

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Question 4

What is the difference between a profit and loss statement and a balance sheet?

Answer 4

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Question 5

What do companies need to provide every year in accordance with the Companies Act 2006?

Answer 5

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Question 6

What is the purpose of a cash flow statement?

Answer 6

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Question 7

How do you carry out a credit check / analyse company accounts?

Answer 7

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Question 8

What type of financial information do you usually request in a PQQ?

Answer 8

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Question 9

What type of ratios can you use?

Answer 9

liquidity ratios, profitability ratios, gearing ratios

Question 10

What are the signs of insolvency in a credit check / company accounts?

Answer 10

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Question 11

What is GAAP

Answer 11

It is a set of standards and principles designed to maintain and improve the consistency and comparability of financial reporting across industries. It standards are based on double entry accounting, also known as balancing the books.

Question 12

What is double entry accounting (balancing the books)

Answer 12

Every transaction is entered as both a debit and credit into two separate general ledger accounts that will roll up into the balance sheet and income statement