APC Mandatory - Accounting Flashcards
What are the Generaly accepted accounting principles GAAP?
They are the standards that encompass the details, complexities and legalities of corporate accounting.
(Generally used by public bodies and larger cooperations and will aim to focus on FORC-M)
What does GAAP include
FORCM
Focuses on consistency via below
Full disclosure
Objectivity
Revenue
Costs
Matching
What are management accounts?
Detailed INTERNAL reports focused on a businesses financial health and operational efficiency
When should management accounts be prepared?
Unlike annual reports, they can be prepared monthly or quarterly.
What are annual accounts for private ltd companies?
Summary of organisation’s financial activities over a 12 month period. Prepared for companies House and hmrc and include a balance sheet, p&l and a cash flow statement
What is a balance sheet
Statement of financial position
Provides a snapshot insight into a companies assets and liabilities at a given date, usually at the end of a financial year.
On a balance sheet what are assets and liabilities?
Assets: cash, land, property, vechiles or stock.
Liabilities: obligation for debt to be repaid such as credit card, loans, mortgages
What is a P&L statement
Shows income/expenditure for the company over the financial year
What is a cashflow statement
Receipts/expenditure during an accounting period
When is a statutory financial audit required?
Companies act 2006
Auditors verify accountants work
Small and micro businesses are exempt if:
Anuall turnover less than 10.2m
Balance sheet less than 5.1m
Number of employees less than 50
What is the IFRS
International financial reporting standards promotes [TAE] transparency, accountability and efficiency.
FRS 102 principle accounting standards in uk financial reporting regime
FRS 15 is used for public sector context
FRS 16 changes in 2019 Inc. Leases more than 12 months must be recorded on the balance sheet
What is gross profit?
REVENUE - COST IF GOODS SOLD
Company profit after deduction of costs for making/selling products associated with providing its services
What is net profit?
TOTAL REVENUE-TOTAL EXPENSES
net earnings after deducting total expenses from revenue
What is accounting?
Process of keeping financial accounts
What is meant by the terms Gross and Net?
In salary terms, Gross is the total salary and Net is the salary minus tax and other deductions
