Accounting Principles and Procedures Flashcards
(25 cards)
What is the purpose of an audit?
- To ensure an organisation complies with policies and regulations
What is Turnover?
Income or revenue an organisation generates through sales of goods or services
What was your organisation’s financial performance last year?
AtkinsRealis generated globally a turnover of CAD 9.5bn and CAD 287m of profit
What is Management Accounting and it’s purpose?
These are financial accounts prepared to be used internally to monitor financial performance. These are usually seen by senior management.
What is Financial Accounting and it’s purpose?
Financial Accounts are prepared for external audiences to report on the financial performance of the organisation. This can be for tax purposes, borrowing money, investors and stakeholders.
Why should company accounts be kept?
Company accounts must be kept by law, to monitor the financial performance and profitability, and for audit purposes.
What is a project bank account and it’s purpose?
Having a separate bank account that is held in escrow designated for a particular project. The aim is to ensure that the supply chain (subcontractors) are paid from there.
What are overheads?
Overheads are indirect or fixed costs associated to operating a business, i.e. rent, leases, utility bills, staff salaries and insurances.
What is Tax depreciation?
Reduction of taxes on assets where the value of it has gone down through depreciation.
Who is the financial regulator in the UK and also in KSA?
UK: - Financial Conduct Authority (FCA)
KSA: - Saudi Central Bank (SAMA)
- Capital Market Authority (CMA)
What are accountancy/ financial ratios?
A quick way to measure the performance of an organisation.
Name some financial ratios
Liquidity Ratio: - Measures the ability of an organisation to pay off their debts using their current assets.
Current Assets/ Current Liabilities
Profitability Ratio: - Measures how profitable an organisation is.
Gross Profit/ Net Sales
Gearing Ratio: - Measures the proportion of debt compared to assets.
Total Debt/ Total Assets
What is financial leveraging?
The process of borrowing capital for the purpose of increasing sales volume, thereby increasing revenue.
What are capital allowances?
A form of tax relief given on property, plant or equipment belonging to an organisation.
What are the key financial statements?
- Balance Sheet
- Income/ Profit + Loss Statement
- Cashflow Statement
What is a balance sheet?
A snapshot at a given time of what a company owns and owes.
What is in a balance sheet?
Assets: - Current/ non current assets
Liabilities: - Current/ non current liabilities
Equity: - Assets - Liabilities = Equity (Wealth)
What is a cashflow statement?
A cashflow measures the flow of monies in and out of a business to determine the financial health.
It provides early indication of financial difficulty.
What is included under a cashflow statement?
- Operating activities
- Financing activities
- Investing activities
How is a cashflow forecast built up?
Attributing cost to project activities as per the programme of works.
What is a income/ profit + loss statement?
A statement to show the net income or profitability of an organisation of a period of time.
What is contained under an income/ profit + loss statement?
- Revenue
- Expenses
- Net income
What is the difference between a income/ profit + loss statement and balance sheet?
P+L provides information on whether a business has been profitable, and a balance sheet shows whether the liabilities can be met through the assets.
What is insolvency and what are the different types?
When an organisation does not have the required type of asset to pay their liabilities.
- Cashflow insolvency
- Balance Sheet insolvency
