Accounting Principles & Procedures

Question 1

purpose of company accounts?

Answer 1

• Monitor financial movement and allow for reporting on current progress.
• Allows QS to monitor the financial strength of contractors/employers.

Question 2

Purpose of statutory accounts?

Answer 2

A company’s accounts required by law.

Prepared from the company’s financial records at the end of the financial year. Must be sent to: Shareholders, Companies House and HMRC as part of the tax return.

Question 3

what is a profit and loss statement?

Answer 3

Financial statement of income and expenditure over a reporting period

• Revenue
• Expenses
• Gains
• Losses

Question 4

what is a balance sheet?

Answer 4

• Indicates the assets and liabilities a company had and how it is funded at a single point in time.
• Must have the name of a director printed on it and must be signed by a director.

Question 5

What is companies house?

Answer 5

Online portal which details information about Registered Companies:

 Includes:
o Profit and loss statements
o Company status
o Secretaries/directors of the company

Question 6

what is a cash flow statement?

Answer 6

Financial statement that shows the amount of cash and cash equivalents entering and leaving a company.

Question 7

what is capital expenditure?

Answer 7

• money spent by a business on acquiring or maintaining fixed assets

Question 8

what is revenue expenditure?

Answer 8

• Costs incurred on maintaining fixed assets.

Includes:
o Repair costs
o Maintenance costs
o Repainting costs
o Renewal expenses

Question 9

what is insolvency and what are the the signs?

Answer 9

Inability of an organisation to pay its debts.

 Highly geared and reliance on loans
 Slow progress on site
 high interim applications

Question 10

what are the employers actions if a contractor was to go insolvent?

Answer 10

 Secure the site and materials associated
 Stop all outgoing payment
 Take a valuation of the works carried out to date

Question 11

what is a Dun & Bradstreet check?

Answer 11

• Database contains more than 290 million business records worldwide including commercial data, analytics and insights for businesses.

Question 12

How did you assess the profit and loss of each contractor on the PQQ for Project X?

Answer 12

• I assess this by looking at there company accounts. Including their profit and loss statement and cash flow.

Question 13

what is the difference between a balance sheet and profit and loss statement?

Answer 13

• The Balance Sheet is a statement of assets, liabilities and capital, whereas the Profit and Loss account is a statement of income and expenses.

Question 14

• What are capital allowances?

Answer 14

• Capital allowances are a type of tax relief for businesses.
• They let you deduct some or all of the value of an item from your profits before you pay tax.

Question 15

What is included in a dun and Bradstreet report?

Answer 15

A D&B report typically has three main scores that assess:

• business credit, which includes the PAYDEX score.
• the commercial credit score.
• the financial stress score.