Accounting Principles and Procedures Flashcards
What is a profit and loss statement?
A profit and loss statement summaries all the activity recorded in your income and expenses accounts over the specified time.
What is a balance sheet?
Reports a company’s assets, liabilities, and shareholder equity at a specific point in time.
What is a cashflow statement?
Financial statement that summarizes the movement of cash and cash equivalents (CCE) that come in and go out of a company.
How is the cashflow statement used?
The cash flow statement paints a picture as to how a company’s operations are running, where its money comes from, and how money is being spent.
How does a balance sheet work?
Asset = liability + shareholder equity
How does a P&L statement work?
Show how much profit or loss was generated by a business?
What is the difference between management and financial accounts?
Management accounts are for the internal use of the management team.
Financial accounts are the company accounts required by law.
What is the Company Act 2006?
It is a comprehensive piece of legislation that regulates all aspects of private and public companies.
This includes general guidance on accountancy obligations and details of accounts that companies must return annually.
