General Flashcards
What is VAT
Value added tax, a tax thats added onto most products and services by VAT registered businesses
What is corporation tax
Paid by UK limited companies, based on the annual profits of said businesses
What is a financial audit?
An important term used in accounting that describes the examination and verification of a companies financial records. It is to ensure that financial info is represented fairly and accurately
What is turnover
Income or revenue that a business receives from its normal business activities, usually the sale of goods and services to customers or clients
What are business overheads and provide examples
Costs to run a business e.g. rent/leasing costs, utility bills, staff salaries etc
Why does a company keep company accounts?
Tax purposes (required by law)
Demonstrates the companies financial standing (supports loan or borrowing applications)
To ensure cashflow and profitability in a company are correctly managed
Please name three types of accounting ratios
Liquidity ratio - orgs ability to turn assets into cash, in order to pay debts
Profitability ratio - assesses a businesses ability to generate profit from sales
Gearing ratio - measures the proportion of a companies borrowed funds to its equity, it can indicate the financial risk to which a business is subjected.
What are the core financial statements which companies might produce?
Profit and loss accounts
Balance sheets
Cashflow forecasts
What checks can you do on a contractors financial standing?
Dun and Bradsheet report
Or experian credit check
What are business overheads?
Indirect costs or fixed expenses of operating a business such as:
Rent / leasing costs
Utility Bills
Staff Salaries
Insurances
