Accounting Principles & Procedures Flashcards
What is PLC?
Public Limited Company
A company which has shares that can be purchased by the public - shares are publicly traded
What are PLC accounts made up of?
**Strategic Report **
- Chairman letter
- Business model
- KPIs
- Sustainability
- Risk report
Governance
- Board of Directors
- Governance report
- Directors renumeration
- Directors report
Financials
- Independent Auditors report
- Company accounts
- Notes on accounts
- 4 or 5 year summary
What is a private limited company
Most common form of Uk company incorporation.
- Any type of business entity in ‘private’ owenership
What is a limited liability partnership
Business partnership structure where each partners liabilties are limitd to the amount they put into the business
What is the blance sheet also known as?
Statement of financial position
What is the cash flow statement also known as?
Statement of cash flows
What is the profit and loss statement also known as?
Income statement
What is the main difference between IFRS and UK GAAP?
IFRS is mandatory for consolidated financial statements (group company financial statements) and is more complex than UK GAAP.
Also mandatory if it reports internationally
- UK GAAP is more cost-effective and is more commonly used amongst small and medium sized enterprises (SMEs)
What are consolidated financial statements?
Financial statements of a group company (entity with multiple subsidiaries)
What is GAAP
- Generally Accepted Accounting Principles .
- Standards that encompass the details, complexities and legalities of business accounting.
- Improves the clarity of communication of financial information
What is included in the Company accounts set out in companies act 2006
- Cover page,
- information and contents page,
- directors report,
- Profit and loss account,
- Balance sheet,
- notes to/from accountant
Principles of GAAP
- Regularity,
- Consistency,
- Sincerity,
- Permanence,
- Non-compensation,
- Prudence,
- Continuity,
- periodicity,
- materiality,
- good faith
Types of asset
Assets:
- Cash,
- real estate,
- trademarks,
- patents,
- marketable securities
Types of liabilities
Liabilities:
- money owed to supplier,
- wages/payroll,
- bank debt,
- taxes owed
What’s the role of an auditor
To inspect and evaluate accounts to ensure they are correct and compliant with the law