Accounting principles & procedures (Level 1)

Question 1

What is the difference between a balance sheet and a profit and loss account?

Question 2

When would you use them?

Question 3

How do you prepare a cashflow?

Answer 3

There are two main types of cash flow forecast:
• The cash flow forecast of a company (i.e. a
contractor or consultant) – otherwise known
as organisational cash flow.
• The cash flow forecast of a particular
construction contract or project – otherwise
known as project cash flow.

The cash flow forecast of a company will
review and analyse the predicted incoming
and outgoing cash for a set period of time
(usually a year) and is often used for business
and resource planning, and for analysing the
financial health of companies.

The cash flow forecast of a construction
contract or project deals specifically with the
payments due under a particular construction
contract. The construction contract cash flow
will often inform a company’s overall cash flow
as they are intrinsically linked. It is important
to understand both types of cash flow forecast
and how and why they are used within the
construction industr

Question 4

If actual was at variance to forecast what does this say?

Question 5

What action would you take?

Question 6

How would you assess the financial standing of a contractor?

Question 7

Other sources of information?

Question 8

What do you understand by the acronym GAAP?

Question 9

Would you understand by the term ratio analysis?

Question 10

Can you give me some typical ratio analysis examples?

Question 11

Can you tell the difference between a balance sheet and profit and loss account?

Question 12

What are statutory accounts?

Question 13

What are management accounts?

Question 14

What are the key differences between management and statutory accounts?

Question 15

In the UK where are statutory accounts for limited companies required to be filed?

Question 16

What current challenges is Covid and/or Brexit bringing to Accounting Principles?