Part 1 Flashcards
What is a balance sheet?
Snapshot of the businesses financial position
As at a certain date
What is a small company (I.e. One which uses unaudited accounts)
Annual T.O -£5.6
Bal sheet -£2.8
Employees -50
Note: must still file accounts at companies house
Where company has to be audited or chooses to be Audited, what is the first thing you should look for in an auditors Report with a company’s audited accounts ?
Statement that audit has been carried out
Auditor satisfied that final accounts provide a fair representation of the financial position of the business
If not satisfied,must state so/why
What is the important please in the auditors report?
Finalaccounts represent a fair and true view of the company’s
Position as stated in the attached P&L
What should a lending manager raise re: audits:
When were the accounts last audited ?
Who are the auditors ?
The accounts should be the …. And the accountant must be ….
Most up to date
Qualified accountant
Accounting standards in the UK are developed by
the ASB and are contained in FRSs
What does a balance sheet contain ?
Date Current assets Current liabilities Net current assets Fixed assets Medium and long term liabilities
What do we mean by carrying out ratio analysis?
Comparison between two figures
To calculate ratios which are both meaningful and add value to the overall analysis
Helps find reasons for movement or variance from historical performance. Or what was forecast to happen
What are financial ratios designed to show and what are the main ratios for?
To show both long term and short term financial position of a business
Main ratios - for capital adequacy and working capital
What is at the heart of business lending decisions?
P & L
Bal sht
Cash flow stents
