Company accounts

Question 1

who is interested and why? (in company accounts)

Answer 1

• shareholders (performance/dividends)
• trade creditors
• lenders, like banks
• competitors
• government (tax)

Question 2

Whats required in the annual report?

Answer 2

• 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.

Question 3

Valuation of items?

Answer 3

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

Question 4

double-entry
bookkeeping

Answer 4

each transaction having a source and
use of funds

Question 5

Two sources of funds?

Answer 5

• equity capital/shareholders funds
• debt capital/liabilities

Question 6

synomym for ordinary shares

Answer 6

common stock

Question 7

difference between ordinary shares and preference shares

Answer 7

ordinary shares have voting rights

Question 8

other name for Undistributed profits

Answer 8

retained earnings

Question 9

rights issue?

Answer 9

when new shares are issued, companies offer
these new shares first to their existing
shareholders in the form of a rights issue

Question 10

what´s a long therm liability?

Answer 10

If repayment is not due for more than
12 months

Question 11

What´s a secured loan?

Answer 11

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

Question 12

fixed - interest securities

Answer 12

debentures or bonds

Question 13

Name the all long term sources of funds

Answer 13

• ordinary shares
• preference shares
• debentures/bonds
• unsecured/secured loans

Question 14

Drawing up accounts” is a phrase that refers to the process of preparing financial statements for a business.

Answer 14

i know

Question 15

Do firms use the same set of standards for their accounts?

Answer 15

yes

Question 16

other word for value of asset?

Answer 16

bookvalue

Question 17

why are there deprecetiations?

Answer 17

because of wear and tear
FIXED ASSETS have a limited
life and consequently lose value over time

Question 18

Goods owned, but not paid for at the balance sheet date,
are booked as?

Answer 18

trade creditors or accounts
payable

Question 19

What are accrued expenses?

Answer 19

when you have to pay for electricity, but only pay once a year, this is a loan too (anwachsende Gebühren)

Question 20

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?

Answer 20

overdraft
The bank can call it in every time!

Question 21

The tax that companies pay on
their profits is called?

Answer 21

corporation tax