Accounting principles and procedures Flashcards
What are the three main financial statements you have been exposed to in your role as a Quantity Surveyor?
Balance sheets, profit and loss statements, and cash flow statements.
How do balance sheets help in assessing an organisation’s financial position?
Provides a snapshot of a company’s assets and liabilities at a specific point in time.
What is a profit and loss statement?
Provides a summary of a company’s revenues, expenses, and profits/losses over a given period of time.
What is a profit and loss statement?
Reports the inflow and outflow of cash, providing insights into a company’s financial health and operational efficiency.
How do financial statements help manage a client’s risk exposure?
They help assess a contractors financial stability.
How does the Companies Act 2006 influence financial reporting?
It requires companies to submit annual accounts, ensuring legal compliance and transparency.
Why is it important to assess a supplier’s financial stability before entering into a contract?
It reduces the risk of project delays or supplier insolvency.
What financial reporting requirements does the Companies Act 2006 impose on companies?
The Act requires companies to submit annual financial accounts.
What are the penalties for non-compliance with the Companies Act 2006 in relation to financial reporting?
Depending on severity, this can include:
Civil penalties: The company may be liable to a civil penalty of up to £1,000 per month for each month the accounts are late.
Criminal prosecution: The company directors may be prosecuted for failing to file the accounts. If convicted, they could face a fine of up to £5,000 or imprisonment for up to two years.
Dissolution of the company: If the company fails to file its accounts for two consecutive years, it may be struck off the Companies House register. This means that the company will cease to exist.
