Accounting principles and procedures/ Business Planning/ Conflict Avoidance, management and dispute resolution/ Data management (Submission) Flashcards
Describe the difference between P&L accounts, balance sheets and cash flow statements?
Profit & Loss/ Income Statement = Tells you a companies Total Revenue - Total Costs = Profit then deducts tax on profit over a period of time (normally over the financial year).
Balance sheet = snapshot in time of a companies condition (assets and liabilities).
Cash flow statement = shows the businesses incomings and outgoings within a given time.
ASKED THIS SESSION
Talk me through what you would expect to see on a P+L account?
The Shanly P&L account shows the following:
Turnover
- Cost of sales
= Gross Profit
- Overheads/ expenses
= Operating profit before tax
- Tax on profit
= Net Profit for the financial year
ASKED THIS SESSION
Talk me through what you would expect to see on Cash Flow statement?
Cash incomings
Cash outgoings
= Net Cash Flow
Difference between P&L and a Cash Flow statement?
A business can be profitable but have a poor cash flow.
e.g. small manufacturer selling products to a large company might receive a delayed payment, meaning they cannot pay their suppliers. Therefore, could have good sales and a profitable business, but a negative cash flow statement.
When would you use a balance sheet over a profit and loss account?
The balance sheet reports the assets, liabilities and equity at a point in time, whereas a P&L statement summarises a company’s revenues, costs, and expenses during a specific period of time.
ASKED THIS SESSION
What is meant by equity?
This is a companies ‘net worth’ = assets minus liabilities.
What is included within a balance sheet?
For Shanly Homes I would expect:
Assets:
- Physical assets (property/machinery)
- Cash
- Debtors (people who owe money)
Liabilities:
- Creditors (e.g. trade creditors = people you owe money)
- Debt
- Tax (Overheads)
- Other provisions (remedial work on sales)
ASKED THIS SESSION
What is Shanly Homes’s turnover and net profit for the last financial year? and how did it compare to the previous year?
Turnover:
2021 = 71,000,000
2020 = 91,000,000
Net profit:
2021 = 6,950,000
2020 = 10,500,000
What is the Shanly Homes business plan?
Confidential but essentially to keep operational geography within same area, maintain high spec product and not to over pay for sites.
What else could you find within a business plan?
Marketing/ Sales strategy
Breakdown of product and services to be used by the business
What are the main risks to Shanly Homes/ House Building going forwards?
Increasing interest rates = more expensive mortgages = slower sales rate
Increasing build cost = lower land values
Increasingly slow planning system. Especially for Shanly Homes with a lot of owned sites.
What does the RICS recommend in terms of Conflict Avoidance? What are the general principles?
- Conflicts should be avoided.
- Conflicts should be managed.
- Conflict resolution methods could be used if a conflict cant be agreed.
MOCK Q
What are the three distinct ‘pillars’ of dispute resolution?
- Negotiation = the problem-solving efforts of the parties themselves to come to an agreement.
- Mediation = a third party intervention which does not bind the parties to a decision but facilities discussions between the parties. This has to be a surveyor whose trained in mediation.
- Adjucative process = an outcome is determined by a third party, auch as independent expert
What is Alternative Dispute Resolution? (ADR)
Dispute processes and techniques to resolve a conflict which fall outside of the courts.
What are the benefits of ADR?
- Typically cheaper and quicker that court proceedings (litigation)
- It is confidential rather than court proceedings
- Specialist experts are involved rather than lay judgers
