Accounting principles and procedures Flashcards
What are the contents of a typical set of Company Accounts?
Chairman report
Independent Auditors report
Income Statement (P&L account)
Statement of financial position (balance sheet)
Cash flow statement
Corporate Governance Report
Remuneration Report
What is a balance sheet?
A balance sheet is a snapshot of a company’s financial position at any given point in time. It report’s on a company’s assets, liabilities and ownership equity.
What is a profit and loss account?
A profit and loss account shows a company’s revenue and expenditure over a given period, typically monthly and then consolidated at the end of the financial year to determine if a company has made a profit or loss.
What is a cash flow statement?
It’s a financial document that shows how much cash is coming into the business for a specific period of time. The statement shows the net cash-flow which shows the companies liquidity.
What are the 3 primary accounts?
Balance Sheet
Profit and loss statement
Cash flow statement
What is the IFRS 16?
International Financial Reporting Standards 16 is the lease accounting standard all companies must comply with.
Changes the way a lease is recorded on a balance sheet. It is now shown as a liability (exemptions when the lease is less than 12 months)
What is GAAP?
General Accepting Accounting Practice (used in the US)
Set of accounting standards framework, principle and procedures when preparing financial statements
What is the difference between management and certified (financial) accounts?
Management = Accounts are prepared for internal purposes
Certified = Accounts prepared by an independent chartered accountant
What is VAT?
Value Added Tax
A tax that is added to goods or services at each stage of production.
It’s a consumer tax, therefore paid by the consumer.
Why should you have your accounts audited?
Provides high level of assurance
Increases credibility
What RICS documents detailed how client money should be handled?
RICS Client Money Handling 2019
What are the 7 rules outlined in Client Money Handling 2019
- Keeping clients money safe
- Holding client money in a client account
- Accounting for client money
- Providing information to clients
- Client money protection
- Handling unidentified client money
- Training and compliance
What accounting record and controls must RICS regulated firms maintain?
- Keep record and accounts that show all dealings with the client money and demonstrate that all client money held by firm is held in a client money account
- Appropriate systems / controls to ensure payments and withdraws from a client account are in accordance with instructions agreed by the client
- Regular client account reviews, conducted by a senior member of the RICS regulated firm
- Ensure robust control and protection of accounting system and client data. Protect ed computer system for access, firewalls, back-ups and disaster recovery.
