Accounting principles & Procedures (L1) Flashcards
What is ROCE and how is it calculated?
Efficiency of cash utilisation.
= net operating profit / capital employed
What is a balance sheet?
Statement of financial position at a moment in time.
(Current and non current)
ASSETS - cash, property, debtors
LIABILITIES - borrowings, creditors, loans
Liabilities+ equity equals what?
Assets
How are your company accounts structured?
We are a private Ltd company.
We have a BS, P&L and CF statement.
Each region has consolidated accounts and are audited
When does a company need to be audited?
> £10.2m turnover
£5.1m assets
50 employees
What is required in a limited company’s accounts?
BS
P&L
Directors report
Notes
What is required in a public company’s accounts?
BS
P&L
Chairman’s statement
Independent auditors report
Remuneration report
Corporate governance structure
What is a profit and loss account?
(Income statement)
Annual income and expenditure
Shows profitability over time
Revenue - COGS = GPM
- Operating expenses = NPM
What is a cashflow?
Shows the cash balance over time
Actual receipt of expenditure (incl VAT)
Cash is from operating, financing, investing activities.
What does the companies act 2006 state companies do?
To file accounts to companies house annually.
Records must be held for 6 years.
What is insolvency
Unable to pay debt
What is auditing?
Certify accounts and a company’s financial position.
What is IFRS 16?
A new lease accounting standard.
2019 onwards
Must recognise a lease in the accounts of lease is >12 months
What accounting standards does your company use?
IFRS
IFRS 15 (revenue recognition)
IAS 2 (inventory)
What financial reporting frameworks are there in the UK?
IFRS and GAAP
