Accounting principles & procedures Flashcards
What are the three types of financial statement you may come across relating to a company?
What is an asset / liability?
Can you give me an example of each?
What is the difference between financial and management accounts?
What do you understand by the term Generally Accepted Accounting Principles (GAAP)?
How do companies know which reporting framework to comply with?
Which reporting framework do public limited companies have to comply with?
How would you assess the financial strength of an entity, e.g. for a valuation?
Can you tell me about a common financial measure?
What is the acid test / ROCE / working capital ratio / gearing ratio / net assets per share?
Can you tell me what the role of an auditor is?
When are audited accounts needed and why?
How do public limited company accounts differ?
Tell me something you understand from the Companies Act 2006.
Tell me what it means to prepare accounts in accordance with IFRS.
What is the difference between UK GAAP and IFRS?
What is the basis of valuation under IFRS 13?
What is fair value?
What has changed in relation to lease accounting / IFRS 16?
When did the change come into effect?
What is FRS 102?
What changes have been made to it?
How has this impacted upon investment property?
What are statutory accounts?
Why is good financial record keeping important to you?
Tell me three ways you ensure that clients’ money is handled properly.
What RICS guidance or Schemes do you adhere to in doing so?
Explain your understanding of the VAT domestic reverse charge for building and construction services.
When do changes to the reverse charge apply from?
What is the impact of the reverse charge on VAT accounting?
Is VAT included in a balance sheet or a profit & loss account?
What regulations have to be complied with when preparing and checking charity accounts?
How are accounts from public bodies audited in Scotland?
Who is required under Companies Act 2006 to publish accounts?
Summary of Experience - Level 1 - Green
All private and public limited companies
Can you explain all the financial statements?
Summary of Experience - Level 1 - Green
- Profit & loss account shows how profitable a company is. It shows a company’s sales, running cost and profit/loss. It can be used to monitor/measure profit/loss, compare past performances and forecast future performances
- Cashflow statement shows the amount of cash or cash equivalents entering or leaving the firm
- Balance sheets show the value of everything a company owns, owes is or is owed. It represents a specific point in time as opposed to a certain period
What is UK GAAP?
Summary of Experience - Level 1 - Green
- UK Generally Accepted Accounting Procedures is a set of accouting standards published by the Financial Reporting Council
- All non-listed companies in the UK can choose between UK GAAP and IFRS
- The set of standards is known as FRS 102 and the most recent version is 2022 but updated in 2023
Other than UK GAAP, what reporting standard is there?
Summary of Experience - Level 1 - Green
IFRS
Can you explain account audits?
Summary of Experience - Level 1 - Green
- Audits are an official inspection of an organisations accounts by an independent body
- They aim to establish whether or not a company’s accounts from a true representation and are compliant with standards
When would a company require an audit?
Summary of Experience - Level 1 - Green
- Most limited companies will require if they meet any two of the following criteria. This criteria is annual turnover no greater than £10.2m, balance sheet total must not be more than £5.1m and average employees must not be more than 50
- Some companies, even if they meet an exemption, must have their accounts audited. These are companies involved in banking, public companies, an authorised insurance company
Explain Fixed Assets and Fixed Costs (overheads).
What is a cash flow statement?
What is difference between Gross and Net Profit?
What do you understand by profit and loss account?
What is a Balance Sheet?
Explain role of Auditor.
When is a P and L produced?
What does a P and L tell you?
What does a BS tell you?
What governs the production of accounts in the UK?
Do all firms have to produce accounts?
Why do you need a client account?
What does a P and L tell you about a firm’s liquidity/solvency?
What external sources are there in relation to determining a firm’s credit worthiness?
Why is a LLP used by professional firms?
