Accounting Principles and procedures

Question 1

What does a business have to publish in the UK?

Answer 1

• Profit and loss account
• Balance sheet
• Cashflow

Question 2

What’s in a profit and loss account?

Answer 2

Displays revenues and expenses during a period.

Question 3

What’s in a balance sheet?

Answer 3

1) Shows assets and liabilities a company has at a point in time
2) Shows shareholders

Question 4

What’s the difference between a debtor and a creditor?

Answer 4

• Debtor: firm owes you
• Creditor: you owe firm

Question 5

Where can the public view company accounts?

Answer 5

Companies House

Question 6

What is the difference between CAPEX and OPEX?

Answer 6

CAPEX: capital expenditure (upfront costs)
OPEX: Operational expenditure (costs over time)

Question 7

Who do comapnies publish their accounts to?

Answer 7

• HMRC
• Companies House

Question 8

Explain insolvency; administration; liquidation; bankruptcy

Answer 8

• Insolvency: company ceased trading because it can’t pay its debts
• Administration: attempt by administrator to resolve a company’s finances
• Liquidation: process of selling assets
  Bankruptcy: same as administration but for an individual