Company accounts Flashcards
who is interested and why? (in company accounts)
- shareholders (performance/dividends)
- trade creditors
- lenders, like banks
- competitors
- government (tax)
Whats required in the annual report?
- for outsiders
- a balance sheet,
a profit & loss account, a flow of funds
statement, a directors’ report and an auditor’s
report
needs to be signed off by directors usw.
Valuation of items?
everything is a going concern (man geht von der Weiterführung des Unternehmens aus), items are valued at their HISTORIC COST
- depreciation = Abschreibung because
of Wear
and Tear
double-entry
bookkeeping
each transaction having a source and
use of funds
Two sources of funds?
- equity capital/shareholders funds
- debt capital/liabilities
synomym for ordinary shares
common stock
difference between ordinary shares and preference shares
ordinary shares have voting rights
other name for Undistributed profits
retained earnings
rights issue?
when new shares are issued, companies offer
these new shares first to their existing
shareholders in the form of a rights issue
what´s a long therm liability?
If repayment is not due for more than
12 months
What´s a secured loan?
if not repaid, the lender gets all
–> cheaper then unsecured loans
–> An especially common form of long-term loan is a
mortgage, which is secured against real estate
fixed - interest securities
debentures or bonds
Name the all long term sources of funds
- ordinary shares
- preference shares
- debentures/bonds
- unsecured/secured loans
Drawing up accounts” is a phrase that refers to the process of preparing financial statements for a business.
i know
Do firms use the same set of standards for their accounts?
yes
other word for value of asset?
bookvalue
why are there deprecetiations?
because of wear and tear
FIXED ASSETS have a limited
life and consequently lose value over time
Goods owned, but not paid for at the balance sheet date,
are booked as?
trade creditors or accounts
payable
What are accrued expenses?
when you have to pay for electricity, but only pay once a year, this is a loan too (anwachsende Gebühren)
Most businesses will, for one reason or another,
at times withdraw more money from their bank
accounts than they actually have in them. When
this happens, the firm is said to be running an?
overdraft
The bank can call it in every time!
The tax that companies pay on
their profits is called?
corporation tax
