Accounting Principles & Procedures

Question 1

What do the contents of a set of public limited company accounts include?

Answer 1

• Chairman’s statement
• Independent auditor’s report
• Income statement (profit and loss account)
• Statement of financial position (balance sheet)
• Corporate governance report
• Remuneration report

Question 2

What is a balance sheet?

Answer 2

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 a financial year

Question 3

Can you name some examples of assets?

Answer 3

Assets can include cash, property, debtors and other investment held

Question 4

Can you name some examples of liabilities?

Answer 4

Liabilities can include borrowings, overdrafts, loans and creditors

Question 5

What is a profit and loss account (income statement)?

Answer 5

It is a summary of the business’s income and expenditure transactions, prepared usually on an annual basis

Question 6

What are management accounts?

Answer 6

They are prepared for internal use by a business and are not audited

Question 7

Who are audited accounts prepared by?

Answer 7

Chartered or Certified Accountant

Question 8

What is International Financial Reporting Standards 16?

Answer 8

• This is the lease accounting standard with which all companies have to comply when using the International Financial Reporting Standards in respect of reporting property liabilities
• The full cost of leases has to be accounted for on the balance sheet
• Exemptions exist for leases of 12 months or shorter