Accounting Principles & Procedures Flashcards
What are the contents of a set of public limited company accounts?
Chairmans statement
Independent auditors report
Income statement (profit and loss account)
Statement of financial position (balance sheet)
Corporate governance report
Remuneration report
Other statutory information
What is a balance sheet? (statement of financial position)
Is a statement of the businesses financial position showing its assets and liabilities at a given date, usually at the end of a financial year
What is an asset?
Can include cash, property, debtors and other investments held
What is a liabilities?
Can include borrowings, overdrafts, loans and creditors
What is a Profit and Loss Account (Income Statement)
A summary of the businesses income and expenditure transactions, prepared usually on an annual basis
What are Management Accounts?
Prepared for internal use by a business and are not audited
What are Audited Accounts?
Prepared by a Chartered or Certified Accountant
What are Consolidated Account?
These comprise a number of individual subsidiary accounts for a company within a single set of accounts
What is a cash flow statement?
This shows all the actual receipt and expenditure to include VAT
What is IFRS 16
Accounting change which impacted how occupiers regard their property liabilities
A new lease accounting standard which all companies have to comply with when using the International Financial Reporting Standards
What is UK GAAP?
Generally Accepted Accounting Principles
What does UK GAAP do?
Provides a framework for the preparation of company accounts in the UK
It is the body of accounting standards published by the Financial Reporting Council (FRC)
When was the new GAAP effective from?
1 Jan 15
How is IFRS 16 put into practice?
The full cost of leases have to be accounted for on the balance sheet
An occupiers obligation to pay rent has to be recognised as a liability
SC payments would be accounted separately
Who does IFRS 16 apply to?
All companies who rent or lease assets for business purposes.
12 + months
Purpose of 16 IFRS?
To report accurate information which reflects lease transactions
To allow accurate analysis of cash flows (e.g. amount, timing and uncertainty) relating to leases
What are the impacts of IFRS 16?
Increased global comparability of accounts
Challenges of IFRS 16?
Collating all relevant lease documentation, e.g. from archives or solicitors, from all entities within a Group company
Differences between GAAP and IFRS?
Most UK companies will use UK GAAP FRS 102 to prepare all financial statements as they are less complex and demanding than international standards
So it is less time and cost
However UK companies who are part of a wider international group may choose to apply IFRS standards for consistency
When was IFRS introduced?
January 2019
