Accounting principles & procedures

Question 1

What are the three types of financial statement you may come across relating to a company?

Answer 1

“1. Balance Sheet
2. Profit and Loss Account
3. Cash Flow Statement “

Question 2

What is an asset / liability?

Answer 2

“An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

On the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses. Liabilities refer to things that you owe or have borrowed. “

Question 3

Can you give me an example of each?

Answer 3

“Asset = Property

Liability = Mortgage “

Question 4

What is the difference between financial and management accounts?

Answer 4

“Management accounts are used internally by the managers of the business

Financial accounts are company accounts required by law and audited by a Chartered Accountant.”

Question 5

What do you understand by the term Generally Accepted Accounting Principles (GAAP)?

Answer 5

“GAAP is a collection of commonly followed accounting rules and standards for financial reporting.

The four basic constraints associated with GAAP include objectivity, materiality, consistency and prudence. “

Question 6

How do companies know which reporting framework to comply with?

Answer 6

The financial reporting framework that applies to UK entities preparing financial statements is set out in FRS 100 Application of Financial Reporting Requirements.

Question 7

Tell me three ways you ensure that clients’ money is handled properly.

Answer 7

“1. All client money is held in Client Money Money account

2. Ensure that Client Money Accounts are designated as such and easily distinguished from other accounts.
3. Advise clients of Client Money to be held in a Client Money Account and notify client of account details.
4. Confirm in writing with bank which holds the client monies that the bank acknowledges that monies in the account must not be combined or transferred to any other account maintained by the member.
5. Client money is available on demand”

Question 8

What RICS guidance or Schemes do you adhere to in doing so?

Answer 8

“RICS Client Money Protection Scheme for Surveying Services,

RICS Rules of Conduct

The RICS Client Money Protection Scheme”