Accounting Principles and Procedures

Question 1

What is the current rate of VAT and Corporation Tax?

Answer 1

a. VAT – 20%
b. Corporation Tax – 25%

Question 2

How often are accounts expected to be lodged and where?

Answer 2

a. Accounts are to be lodged annually with His Majesties Revenues and Customs (HMRC)

Question 3

What are the 3 main financial statements?

Answer 3

a. Balance Sheet
b. Profit and Loss Statement
c. Cash Flow Statement

Question 4

What is a Balance Sheet?

Answer 4

a. A statement of assets, liabilities and capital within a business

Question 5

What is a Profit and Loss statement?

Answer 5

a. Summarises revenues, costs and expenses

Question 6

What is a Cash Flow statement?

Answer 6

a. Outlines the incoming and outgoing expenditure of a business

Question 7

What is the difference between operational expenditure and capital expenditure?

Answer 7

a. Capital – Used to purchase physical goods that will be used for more than 1 year and are recorded as an asset on the Balance Sheet
b. Operating – Bulk of company’s regular costs and are tax deductible

Question 8

What is the purpose of keeping company accounts?

Answer 8

a. Identifying, measuring and recording economic data and performance

Question 9

What are IFRS?

Answer 9

a. The International Financial Reporting Standards. These are a set of accounting principles developed by the International Accounting Standards Board (IASB).