APC Mandatory - Accounting

Question 1

What are the Generaly accepted accounting principles GAAP?

Answer 1

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)

Question 2

What does GAAP include

Answer 2

FORCM
Focuses on consistency via below
Full disclosure
Objectivity
Revenue
Costs
Matching

Question 3

What are management accounts?

Answer 3

Detailed INTERNAL reports focused on a businesses financial health and operational efficiency

Question 4

When should management accounts be prepared?

Answer 4

Unlike annual reports, they can be prepared monthly or quarterly.

Question 5

What are annual accounts for private ltd companies?

Answer 5

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

Question 6

What is a balance sheet

Answer 6

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.

Question 7

On a balance sheet what are assets and liabilities?

Answer 7

Assets: cash, land, property, vechiles or stock.
Liabilities: obligation for debt to be repaid such as credit card, loans, mortgages

Question 8

What is a P&L statement

Answer 8

Shows income/expenditure for the company over the financial year

Question 9

What is a cashflow statement

Answer 9

Receipts/expenditure during an accounting period

Question 10

What is the main difference between a cash flow statement and a balance sheet?

Answer 10

A balance sheet reflects a specific point in time, whilst cash flow statements and profit and loss accounts reflect a period of time.
Cash flow statements are not included in the annual accounts, they are used for management purposes.

Question 11

When is a statutory financial audit required?

Answer 11

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

Question 12

When is a company exempt from financial auditing under the Companies act 2006

Answer 12

Annual turnover: less than £10.2mill
Balance Sheet: less than £5.1mill
Number of employees: less than 50

Question 13

What is the IFRS

Answer 13

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

Question 14

What is gross profit?

Answer 14

REVENUE - COST IF GOODS SOLD

Company profit after deduction of costs for making/selling products associated with providing its services

Question 15

What is net profit?

Answer 15

TOTAL REVENUE-TOTAL EXPENSES

net earnings after deducting total expenses from revenue

Question 16

What is accounting?

Answer 16

Process of keeping financial accounts

Question 17

What is meant by the terms Gross and Net?

Answer 17

In salary terms, Gross is the total salary and Net is the salary minus tax and other deductions

Question 18

Why do Chartered surveyors need to understand and be able to interpretation company accounts?

Answer 18

A) assessing competition
B) setting up new firm
C) assist with business operations
D) rental analysis for percentage turnover top ups etc.

Question 19

What does EBIDTA mean?

Answer 19

Earning s before interest, taxes, depreciation, and amortisation

Question 20

What is VAT

Answer 20

Value added tax
Standard rate 20%

Question 21

Uk GAAP

Answer 21

GAAP in the UK. Valuations for inclusion in financial statements are prepared in accordance with UK GAAP

Question 22

What are valuations for financial statements under UK GAAP?

Answer 22

Under UK GAAP (Generally Accepted Accounting Principles), property that is owner-occupied must be valued at its existing use value (EUV) or depreciated replacement cost (DRC).

Question 23

What is the difference between GAAP and IFRS

Answer 23

GAAP = Rule based
IFRS = Principle based

Question 24

What accounts are most useful to you when doing the profits method?

Answer 24

Three years previous to the valuation date as long as they are a full set of accounts.

Question 25

What are asset valuations

Answer 25

LA’s are obliged to re-value property assets on either a 3 or 5 yearly rolling programme. Under CIPFA (Chartered Institute of Public Finance and Accountancy) rules, public sector organisations are also required to maintain a register of property assets and to represent these within their accounts.

Question 26

What do companies need to provide to every year in accordance with the Companies Act 2006?

Answer 26

Cashflow, balance sheet and P&L statement