Accounting Principles and Procedures Flashcards
What is a Balance Sheet?
A total of a companies assets, liabilities, and stakeholder equity in a fixed moment in time.
What is a Profit & Loss Statement
Income and Expenditure over a period of time.
What is a cashflow statement (in a business context, not construction cashflow forecast)
Measures cash inflows and outflows over a period of time (Broader than a P&L Statement, and incl portfolio investments, grants, charity work etc).
What is auditing?
A financial inspection.
What is the purpose of an internal audit?
To ensure processes and practices are being followed correctly.
What is the purpose of an external audit?
Where an external body check financial accounts and ensures the company is operating as they should be.
What is corporation tax?
A tax on a company’s profits. Currently at 25% (from Apr 24).
Why would you need to be able to interpret and understand company accounts?
Used within the tender process to ensure tenderers are financially stable - in order to protect the client from contractor insolvency.
A Dun & Bradstreet report could be used to get this information.
As mentioned in your summary of experience, how are fees calculated on a project?
My firm has its own procedure for preparing fee submissions, this comprises:
1) Understanding what the Client’s requirements are and identifying whether this is a service that we provide.
2) A bid or no bid form is populated to identify if this is suitable for the business by considering the risks involved.
3) There are varying levels of sign off depending on fee value prior to submission.
What role do you play in the profitability of your company?
1) Providing a good quality service to maintain consistent Clients.
2)
How would you calculate a fee proposal?
1) I would review the work involved with the commission based on the level of information
2) I would calculate the time & number of individuals required to undertake the work & multiply it by an hourly rate adding a suitable allowance for OH&P.
Can you name 3 things which are excluded from your scope of service?
1) Calculating VAT.
2) Calculating LD’s.
3) Drafting & Issuing a Letter of Intent.
What are some signs a Contractor may be showing sings of instability?
1) Lack of trades on site
2) Word of mouth
3) Trades taking materials away from the site
4) Industry reports (example is Ardmore showing a £10m loss in Building Mag).
What is an income statement?
An income statement, or profit loss account, shows a companies revenues and expenses over a particular period of time.
