Accounting Principles

Question 1

What would you expect to find in a set of Public Limited Accounts

Answer 1

Chairman’s statement
Independent auditors report
Income statement (profit and loss account)
Statement of financial position (balance sheet)
Corporate governance report
Remuneration report
Other statutory information

Question 2

What’s a profit and loss statement?

Answer 2

Same as an income statement

A summary of the business’s income and expenditure prepared usually on an annual basis

Question 3

What is a balance sheet?

Answer 3

Same as a Statement of financial position.

It shows a businesses assets and liabilities at a given date (end of the financial year)

Question 4

What is considered an asset and a liability

Answer 4

Assets:
Cash
Property
Debtors
Other investments 
(Rental income from leases)

Liabilities:
Borrowings
Overdrafts 
Loans
Creditors

Question 5

What’s the difference between audited accounts, management accounts and a consolidated set of accounts?

Answer 5

Audited accounts are prepared by a chartered or certified accountant

Management accounts are prepared for internal use my a business and are not audited

Consolidated set of accounts comprise a number of individual subsidiary accounts for a company within a single set of accounts

Question 6

What is a cash flow statement?

Answer 6

A cashflow statement shows all the actual receipts and expenditure to include VAT.
It is not included in the annual accounts.