Finance questions Flashcards
What’s the organizational structure of the accounting department?
Chief Financial Officer represents whole accounting department on the Board. Below him there ate 3 senior managers:
Financial Controller
Treasuer
Chief Accounting Officer
What are the responsibilities of a Financial Controller?
He is responsible for preparing forecasts and budgets (planing), comparing planing spending with actual (monitoring), producing financial data and analysing major investment decisions
What is a Chief Accounting Officer responsible for?
He’s responsible for keeping the company’s books, preparing financial statements, tax returns and developing strategy to minimalizing taxes
hat are a Treasurer’s tasks?
he is responsible for managing cash flow and raising new funds
Present and describe a company’s financial statements.
income statement (Profit and loss account, P&L) - summarizes business activity over
period of time. Consist information of revenue and costs.
balance sheet - reports the company financial condition on specific data. Consist information about assets and liabilities.
cash flow statement - shows the movement of cash and cash equivalents in and out of business in specific time
What are the causes of and solutions to cash-flow statements?
cash flow causes:
unexpoected late payments
unforeseen costs
unexpected drop of demand
too much investment in fixed assets
solutions:
credit control
stock control
expenditure control
sales promotion to generate cash quickly
debt factoring
What does the preparation of the accounts look like?
accounting process starts with inputs like: invoices, payroll records, bank records. Next this data is processed by specialized software.
Entries are recorded into journals
Information from journals is posted into ledgers to specific cathegories
trial balance is prepared at the end of each accounting period to check correctenes of figures. It is used to prepare main financial statements
What are current assets and current liabilities? Give examples.
Current assets are short term resources owned by company that is expected to be converted into cash. Examples:
cash at bank
inventory
account receivable
current liabilities
Thats obligations that company must settle within one year. Example:
bank debts
account payable
accured salary and accured taxes
What’s ‘working capital?’
Quick measure of whether there is anough cash freely available to keep the business running
Give examples of fixed assets and long-term liabilities.
fixed assets:
buildings
vehicules
Machinary
long -term liabilities
mortgage
bond payable (due term further term then one year )
What are intangible assets? Give examples. +
That’s non-phisical long therm assets that have value, because they provide business priviliges or competitive advantage. Examples:
software
licence
What do central banks do ? How can they act? Describe the tools they use.
Central bank is public institution that manage natinal currency.
It act in economy through monatery policy to influence money supply, credit availability and interest rate
Tools:
Open market operations
Central bank buy and sell bonds. To cool economy they sell bonds to public. The money recived to payment are no longer in economy circulation.
Reserve requirements
The central bank tells commercial banks what percentage of their customer accountt must be phisicaly kept in cash When reserve rise, banks have less money to lend and the economy cool.
Rising and lowering interest rates
The central bank control base rate (discount rate) -how much commercial banks have to pay to borrow money from them. Thist rate is passed with additional margin to customers wanted to have loan. When economy is booming the central bank raises interest rates to make borrowing more expensive.
What’s fiscal policy and what does it concern? What happens when taxes aree high? Who benefits and who loses then?
Fiscal policy refer to governments effort to keep the economy stable by increasing and decreasing taxes and government spending.
High taxes slow economy becouse they take money out of private sector and put it into hands of government. They also discourage small business by decreasing profit margins and make effort less rewarding. In practice govenment spend this money to utilities like schools, hospitals.
What’s logistics and its key issue? Which department in the company deals with it?
Logistics is process of planing and controlling the phisical flow of materials in supply chain. Department of distribution care of that.
Describe stages of logistics
inbound logistics - brinking raw materials from suppliers to producers
materials handling - movment of goods within warehouse, from warehouse to factory and from factory floor to workstation
outbound logistics - manages flow of finished goods from intermediaries to final customers
reverse logistics - bringing back to original manufacturer becouse of defects
