Chapter 10 - Accounting Flashcards
What are objectives of accounts?
- To summarise results of transactions to help management run the company
- To report to interested parties the state of affairs of the company and enable analysis of the company by them
In accordance with what act what must large companies provide annually?
in accordance with the companies act 2006: o Income statement o Balance sheet o Director’s report o Auditor’s report o Cash flow statement o Statement of changes in equity
In accordance with what act what must listed companies provide annually additionally?
in accordance with the companies act 2006:
o Must also produce half-yearly interim reports
What are small and medium sized companies exempt from?
Small and medium-sized companies are exempted from delivering full annual financial statements to the Registrar of companies and file abbreviated financial statements
What constitutes a small company?
Must satisfy two or more of the following criteria:
- Turnover = less than £10.2 mill
- Balance sheet total = less than £5.1 m
- Average number of employees = less than 50
What constitutes a small company?
Must satisfy two or more of the following criteria:
- Turnover = less than £36 mill
- Balance sheet total = less than £18 m
- Average number of employees = less than 250
What are the two legal categories of organisation?
Bodies sole
Bodies corporate
What is a bodies sole?
Sole trades and partnerships which have no legal requirements to produce accounts
What are bodies corporate?
All other forms of organisation that aren’t bodies sole - these are recognised by law as being a legal entity seperate from their owners
How is a company formed
Is a body corporate and is a legal entity formed by the companies acts
what are the two classes of company whose liability is limited by shares? & describe these
- A public company - is defined by the companies act as one that has minimum issued share capital of £50,000 (the shares must be at least 25% paid-up, with any share premium fully paid-up and is registered as being a public company.
- A private company (LTD)- any other company
What is a close company defined as?
One which is under the control of 5 or fewer persons (together with their associates) or is under the control of its directors.
Who is responsible for determining general policy and issuing accounting standards. What are these accounting standards known as ?
FRC
Financial reporting standards
Who is the International accounting standards body IASB
an independent, privately funded accounting standards setter.
What does the IASB set?
Designated IFRS
Does the IASB have authority?
No - has no authority to require compliance with its accounting standards.
However, under regulation of the European Parliament and Council, for each financial year, companies governed by EU law must prepare their statements in conformity with IFRS if, at their balance sheet date, their securities are admitted to trading on a regulated market of any member state.
Which companies are required to use IFRS?
- Consolidated accounts of listed companies
- AIM companies
May use:
- Listed companies
- Other companies and limited liability companies
