Property stage 1

Question 1

What must an annual report show?

Answer 1

• A Trading and Profit and Loss Account.
• A Balance Sheet.
• A Directors’ Report.
• An Auditors’ Report.
• Group Accounts (where there are subsidiary companies).

Question 2

What is a directors report

Answer 2

This report is more detailed, and the Companies Act of 1985
lays down regulation as to its’ content: It should contain
a fair review of the development of the business of the
company and its subsidiaries during the financial year and
their position at the end of it. The report should also state the
amount (if any) which they recommend should be paid as
dividend and the amount (if any) which they propose to carry
to reserves.

Question 3

What is in a auditor’s report?

Answer 3

The Auditors must indicate whether, in their opinion, the
company has kept proper accounts during the financial year
and whether those accounts give a ‘true and fair’ view of the
state of affairs of the company.

Question 4

What is in a balance sheet

Answer 4

What the Balance Sheet provides is a ‘snapshot’ list of
* The organisation’s assets (vehicles, buildings and
monies owed etc.)

• The organisation’s liabilities (loans and debts)
  It then arrives at the organisation’s net worth which, as
  we know from Chapter 1 is owned by the shareholders in
  proportion to their investment.

Question 5

What is the cash flow statement

Answer 5

The main financial statements consist of sets of figures. The
Notes to the Accounts explain the rationale and reasoning
behind the figures. They may explain why an item in the
accounts has been treated in a certain way. When reading
a set of Financial Statements, the notes are invaluable if the
full accounting picture is to be revealed.