Accounting Principles and Procedures (Level 1)

Question 1

Financial Statement - What is a Financial Statement?

Answer 1

A financial statement is a formal document that provides information about the financial performance, position, and cash flows of an entity, typically for a business.

Question 2

Financial Statement - What is included in a Financial Statement?

Answer 2

Balance Sheet
Profit and Loss Account (income statement)
Cash Flow Statement

Question 3

Financial Statement - What is a Balance Sheet?

Answer 3

• statement of financial position
• shows businesses financial postion
• shows assets and liabilities at given date, usually end of financial year
• assets can include cash, property, debtors and other investments
• liabilities can include borrowings, overdrafts, loans and creditors

Question 4

Financial Statement - What is Profit and Loss Account?

Answer 4

• Profit and Loss account is also known as income statement
• summary of business income and expenditure
• prepared usually on annual basis

Question 5

Financial Statement - What is a Cash Flow Statement?

Answer 5

• shows all cash flow inflows and outflows to include VAT
• shows how well an entity manages its cash
• crucial to understand liquidity

Question 6

Type of Accounts - What are Management Accounts?

Answer 6

• Internal use only
• not audited
• for business use

Question 7

Type of Accounts - What are Audited Accounts?

Answer 7

• prepared by certified accountant

Question 8

Type of Accounts - What are a Consilidaated Set of Accounts?

Answer 8

• a number of individual subsidiary accounts for a company with a single set of accounts

Question 9

Public Limited Company - What is included?

Answer 9

• chairmen statement
• independent auditors report
• income statement (profit and loss)
• balance sheet
• corporate governance report
• remuneration report
• other statuatory information

Question 10

IFRS 16 - What is IFRS 16?