Accounting Principles and Procedures Flashcards
What is a final account in a construction project?
The final account is the conclusion of the contract sum (including all necessary adjustments) and signifies the agreed amount that the employer will pay the contractor. It includes any works that are paid to the contractor through the main contract.
What are the accepted accounting principles?
Standards that include the details, complexities, and legalities of business and corporate accounting.
What are management accounts?
Detailed reports that shed light on a business’ financial health and operational efficiency, holistic view of were the business stands and were it is headed.
When should management accounts be prepared?
Monthly or quarterly, decision makers have up to date information.
What are annual accounts for a private limited company?
Summary of a company’s financial activity over a 12-month period. For companies house and HMRC – balance sheet, profit and loss statement and cash flow statement.
What is a balance sheet?
Financial statement which will give you a snapshot insight into your business assets, liabilities and share holders’ equity at a specific point in time. Indication of financial health of your company at that time. Comparison of what is owned vs what is owed. Deals with assets and liabilities.
On a balance sheet, what is an asset?
Something owned by the organisation or that you can get benefit from. Fixed – land, property and vehicles. Current – stock, petty cash, cash in the bank.
On a balance sheet, what is a liability
a debt which will need to be paid. Long term – money not due in the next year. Current – due within a year.
What is a profit and loss statement
Records performance over a period of time, not a snapshot like a balance sheet. Total revenue, total expenses of the business throughout the financial year.
What is a cash flow statement
Explains cash movements in and out the business over the year. Cash flow is the amount of money which comes in and out of the business during a period of time.
When is a statutory financial audit required?
Annual independent inspection of company accounts required by law unless you qualify audit exemption. Accounts have been prepared correctly, accurately and to relevant standards.
