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?
Explain the differences between Statutory and In-House Accounts
Statutory account reports provide an overview of all finances while management accounts get into gritty details. Statutory, from a technical accounting point of view, allows the business owner to see exactly what the end result of their efforts actually is, as all information is adjusted for tax purposes.
Management accounts, on the other hand, allow for greater levels of focus and a more in-depth analysis of your business
What is the difference between financial and management accounts?
How would you manage your own businesses’ accounting?
Appoint a suitably qualified accountant.
What components make up Statutory Accounts?
- a ‘balance sheet’, which shows the value of everything the company owns, owes and is owed on the last day of the financial year
- a ‘profit and loss account’, which shows the company’s sales, running costs and the profit or loss it has made over the financial year
- notes about the accounts
- a director’s report
- an auditor’s report
What are in house accounts used for?
Management accounts form a financial report used by business owners and management for day-to-day and strategic decision making.
What is the purpose of a cash flow forecast?
A cash flow forecast shows your projected cash based on income and expenses and is an important tool when it comes to making decisions about activities such as funding, capital expenditure and investments.
If you had to do a credit check, how would you go about this?
In my current company, this is a service that can be provided by the accounting team
If you had to do a credit check, how would you go about this?
In my current company, this is a service that can be provided by the accounting team
What are the roles of Internal and External Auditors?
Internal auditors are company employees, while external auditors work for an outside audit firm. Internal auditors are responsible to management, while external auditors are responsible to the shareholders.
Internal auditors can issue their findings in any type of report format, while external auditors must use specific formats for their audit opinions and management letters.
Internal audit reports are used by management, while external audit reports are used by stakeholders, such as investors, creditors, and lenders.
What current challenges is Covid and/or Brexit bringing to Accounting Principles?
- Independent auditor’s report
- Profit and loss account
- Balance statement
What is a balance sheet?
Statement of the businesses’ financial position showing it’s assets and liabilities at a given date
Assets can include cash, property, debtors and other investment held Liabilities can include borrowings, overdrafts, loans and creditors
What is a profit and loss statement?
Summary of the businesses income and expenditure transactions, prepared usually on a annual basis
What do you analyse companies’ accounts?
To assess a company’s performance over a period of time against similar companies. To verify the solvency and financial suitability of potential contractors.
