Accountancy Principals And Procedures Flashcards
What is a profit and loss account
Shows a company’s revenue and expenses over a particular period of time
What is a balance sheet
A statement of businesses assets, liabilities and owners equity
What does a cash flow forecast do
Reviews the predicted incoming and outgoing cash for a set period of time.
What is liquidation
The process in which a company sells its assets before dissolving it entirely
What is insolvency
A state of financial distress where a business is unable to pay their debts
What is administration
When an administrator takes control of an insolvent company’s assets to try and rescue the business.
What documents would you check when reviewing a companies finances
Balance sheet
Profit and loss account
Cashflow
What are overheads
Operational costs of a business incurred on an ongoing basis (fixed or variable)
Why does a business keep company accounts
Record a company’s profitability
Tax calculation
Legislation requires companies to keep accurate records
What’s a dun and bradsheet report
A business credit report which provides a score of a companies credit rating
Used to help determine the financial health of a company
What are capital allowances
A group of uk income and corporation tax reliefs available to businesses for capital expenditure
Give some examples of where the client is allowed to deduct capital allowances from taxable profits
Plant and machinery
