Accounting Principles and Procedures Flashcards
What is the difference between management accounts and financial accounts?
- Management Accounts: Management accounts are a set of financial statements prepared either monthly or quarterly, which provide historical data & look create business forecasts.
- Financial Accounts: Financial accounts only look at historical financial data.
What is a profit and loss account?
The profit and loss (P&L) statement is a financial statement that summarizes:
- Revenues
- Costs
- Expenses
- during a specified period, usually a fiscal quarter or year.
What is Capex?
Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.
What is Opex?
Operating expenditures (OpEx), an operating expense is an expense a business incurs through its normal business operations.
What is a cash flow statement?
Complements a balance sheet.
It summarises the cash and cash equivalents entering and leaving the company during a period.
What is a balance sheet include?
A statement of the assets, liabilities, and capital of a business
Assets: Liabilities + Shareholder’s Equity
Name and explain some ratios you might use to assess the financial health of a company
Book to bill: A ratio of orders taken to invoices sent over a set period of time. In other words, a book-to-bill ratio compares current customers (orders taken) to previous customers (invoices sent).
Why is it important to compare a company’s cash flow statement to their profit and loss statement?
It is important to understand the net incoming to understand the efficiencies of the company. Turnover may be high, but margins may be low.
How did you produce the pre-construction cash flow report on Fleet Street?
- We used our cost estimates & split the costs across the programme.
- We took into account the release of retention etc.
- It was a relatively simple exercise.
