Accounting Principles & Procedures - Lvl 1 Flashcards
What are Financial Statements?
Financial statements are written records that convey the business activities and the financial performance of an entity.
Can you provide examples of Key Financial Statements?
1) Profit & Loss account
2) Balance Sheet
3) Cash Flow Statement
What is the difference between Management and Financial accounts?
financial accounts are required by law e.g under the Companies Act 2006 and are prepared annually
management are prepared more regularly and are for internal use only
What is the difference between a Profit & Loss account and a Balance Sheet?
1) A Profit & Loss account shows the incomes and expenditures of a company and the resulting profit or loss.
2) The Balance Sheet shows what a company owns (assets) and what it owes (liabilities) at a given point in time.
What is a Cash Flow Statement?
It is the summary of the actual or anticipated ingoing and outgoing of cash in a firm over the accounting period.
It is broken down into operating, investing and financing activities.
It measures the short term ability of a firm to pay off its bills.
What is the difference between Debtors and Creditors?
Creditors - Your firm owes another firm money - e.g. If you owe a sub-consultant fees then they are a creditor.
Debtors - A firm who owes your firm money - e.g. a client who owes you fees is a debtor.
What is an Escrow account?
What are the two types of company accounts?
financial
management
When does the UK tax year run?
from 6th April to 5th April of the following year
What is a balance sheet
What is a profit and loss statement?
How long are you required to keep company accounts for?
3 years for private companies
6 years for PLCs
What is a credit report?
Where can you view a companies accounts?
Companies House
What are the size categories for companies?
