Accounting Principles & Procedures Flashcards
What is included in a public limited company accounts?
Chairmans Statement
Independent Auditors Report
Profit and loss account
Balance sheet
Corporate Governance report
Remuneration report
CRIB PC
What is a balancing sheet?
A balance sheet is a statement of the business’s financial position showing its assets and liabilities at a given date, usually at the end of the financial year.
Company Balance sheet has three parts;
- Assets - what a company owns
- Liabilities - what the company owes
- Ownership equity
What is cash flow?
monthly income and expenditure over the course of 12 months.
What is included within assets and liabilities?
Assets include cash, property, debtors.
Liabilities include loans, debt to suppliers, rent on office leases
What is the difference between the assets and liabilities?
The difference between the assets and liabilities is known as equity of the company.
What are the two types of assets and an example?
fixed and current
Current Assets = monies owed to the company EG invoices, cash in hand, cash balances at the bank
Fixed Assets = equipment belonging to the business EG computers
Fixed Liabilities - mortgage, purchase agreement for cars etc (Due over 10 year term or something)
Current Liabilities - due within a year EG salaries, rent, VAT tax bill etc
What are management accounts?
are prepared for internal use by a business and are not audited.
What is a profits and Loss Account & what examples do you have of income or expenditure?
A summary of the businesses income and expenditure transactions prepared on an annual basis.
Examples being anything a company would expense such as salaries, rent on an office building, advertising, insurance.
What is the definition of Sales?
Sales are defined as invoiced amounts to customers excl. VAT.
What is Directors Remuneration ?
Compensation the company gives to its directors for the services rendered
What is Corporation Tax?
The only tax stated in company accounts in corporation tax.
What is dividends?
Distribution of profits by a corporation to its shareholders.
Can you outline to me how you would prepare a SC budget?
- Examine any new leases to see if any new SC Caps
- Verify floor areas (sq ft) to guarantee the accuracy of budget allocations.
- Compute all internal fees, such as management fees, service charge accounting fees, staff costs, audit, and professional fees based on an RPI matrix scheme or a percentage of the total budget.
- Following the completion of all expenses - budget get sent to a senior colleague for approval before getting sent to the client for approval.
- Accounts will then upload the budget & generate the appropriate invoices for the tenants.
- Upon raising the charges, I promptly communicate with tenants via a comprehensive email, outlining any adjustments for the upcoming year.
What is GAAP?
Generally Accepted Accounting Principles
What is the benefit/purpose of GAAP?
To improve the clarify of the communication of financial information
Improve
clarity
communicatyion
financial information
What are the 10 principles of GAAP?
Regularity
Consistency
Sincerity
Permanence
Non-compensation
Prudence
Continuity
Periodicity
Materiality
Utmost good faith
RCSP NPCP MU
What are the core aims in RICS Service Charge in commercial Property 2018
- Improve general standards and promote best practice, uniformity, fairness and transparency in services charges in commercial property
- Ensure timely issue of budgets and year-end certificates
- Reduce the causes of disputes and to provide guidance on resolution,
- Provide guidance to solicitors, their clients (whether owners or occupiers) and managers of service charges in the negotiation, drafting, interpretation and operation of leases, in accordance with best practice.
Why IFRS replaced IAS?
-Goal was to make it easier to compare businesses around the world
- Wanted to increase transparency and trust in global reporting
What is the main difference between IFRS and GAAP?
IFRS - principles to follow by
GAAP - is the rules to follow.
If a company is on the London Stock Exchange then has to be IFRS.
What is IFRS 16?
Effective from 1 January 2019
IFRS 16 is the lease accounting standard with which all companies have to comply when using IFRS.
The full costs of leases have to be accounted for on the balance sheet.
IFRS 16 sets out principles for an IFRS reporter:
Recognise,
Measure,
Present and disclose leases within the balance sheet.
What is the objective of IFRS 16?
- Faithfully represents lease transactions
- Provides a basis for users of financial statements to assess the amount, timing and uncertainty of cash flows
What are the two parts of a Dunn and Bradstreet rating?
Financial strength indicator
Risk indicator
What governs the format of company accounts?
The Companies Act 2006
What does the the companies Act 2006 cover?
Cover Page
Information and Contents Page
Directors Report
Accountants Report
Statutory Profit and Loss Account
Balance Sheet
Notes to the Accounts
Detailed Profit and Loss Account
DISBAND C
