Accounting Principles and Procedures Flashcards
What are the contents of a set public limited company accounts?
- Chairman’s statement
- Independent auditor’s report
- Income statement (profit and loss account)
- Statement of financial position (balance sheet)
- Corporate Governance Report
- Remuneration report (money paid for work or a service)
- Other statutory information
What is a balance sheet?
A statement of the business’s financial position showing its assets and liabilities at a given date, usually at the end of a financial year.
Assets can include cash, property, debtors and other investments held.
Liabilities can include borrowings, overdrafts, loans and creditors.
What is a Profit and Loss Account?
A summary of the business’s income and expenditure transactions, prepared usually on an annual basis - ‘ measures the profitability of the business’.
What are management accounts?
They are prepared for internal use by a business and are not audited
Who are audited accounts prepared by?
A Chartered or Certified Accountant
What are consolidated set of accounts?
Compromises a number of individual subsidiary accounts for a company within a single set of accounts.
What is a cash flow statement?
Financial statement that shows how much cash a company has on hand for a specific period of time. It details all the cash inflows and outflows from the company’s operations, investment and debts.
How must occupiers now regard their property liabilities under IFRS16?
The full cost of leases >12 months have to be accounted for on the balance sheet.
An occupier’s obligation to pay rent has to be recognised as a liability, though service charge payments would be accounted for separately.
What are included statutory accounts?
They include:
- Balance Sheet
- Profit and Loss Account
- Notes about the accounts
- Directors Report
What is the primary reason for producing statutory accounts?
To share annual financial information with shareholders, HMRC and companies house.
What are management accounts?
They show current performance allowing management to make decisions and future planning.
Management reports are exclusively used for internal decision making.
