Accounting Principles Flashcards
What is the difference between a profit and loss account and a balance sheet.
A profit and loss account shows the income and expenditure of a company and resulting profit or loss.
The balance sheet shows what a company owns (assets) and what is owes (liabilities) at a given time.
What are key financial statements that all companies must provide?
- Profit and loss accounts
- Balance sheets
- Cash flow statements
PLC
- chairmen’s statement
- independent auditor report
- corporate government report
- remuneration report
- other statutory information
what is a cashflow statement?
A summary of the actual or anticipated ingoing and outgoing of cash in a firm over an accounting period,.
The cashflow in broken down into:
- Operating
- Investing
- Financing activities
What is the difference between debt and credit?
Creditors are individuals/businesses that have lent funds to another company and are therefore owed money.
Debitor are individuals/companies that have borrowed funds from a business and therefore owe money
What is the difference between management accounts and and audited accounts?
Management accounts are prepared for internal use
Audited accounts are prepared by a chartered accountant, they are legally required.
What importance of maintaining service charge accounts?
- ## retain a record of expenditure to demand accordingly and budget for the following year based on trends
why should company keep accounts?
- monitor company performance
- future business planning
- highlight problem areas
- submit financial statements to company house
Definition Escrow Account
An account where funds are held in trust, whilst two or more parties complete a transaction.
Overhead - Fixed and variable
Overhead - costs that incurred for operating businesses
Fixed - fixed charge
Variable - expenses that can change
When do firms need pay VAT
£85,000 and above.
