Accounting Principles and Procedures Flashcards
(6 cards)
What is the purpose of a balance sheet, and what does it show?
A balance sheet provides a snapshot of a company’s financial position at a specific point in time.
It shows the company’s assets and liabilities.
This allows stakeholders to understand what the company owns and owes, as well as the net worth. It is an essential part of annual reporting and supports investment decisions.
Can you explain the difference between a balance sheet and a profit and loss account?
A balance sheet shows a company’s financial position at a given time, while a profit and loss account (P&L) reflects the company’s financial performance over a period.
The P&L reports income, expenses, and profit or loss, helping to assess the profitability of business activities. Both are key components of financial reporting and investor analysis.
What role do project budgets play in financial control?
Project budgets help control costs, track spending, and ensure that financial resources are allocated efficiently. In my role, I prepare pre-planning budgets using cost benchmarks from similar projects. This provides a realistic financial framework and helps set expectations for internal stakeholders and investors.
How do cash flow forecasts support effective project delivery?
Cash flow forecasts ensure that sufficient funds are available when needed for project milestones. They help prevent funding shortfalls and align expenditure with key development phases. I review and maintain these forecasts to ensure our projects stay on track and meet internal funding and delivery requirements.
How do accounting principles relate to your involvement in site disposals?
I attend regular disposals meetings where we review the sales pipeline and forecast revenue. This contributes to meeting our annual sale targets, which are then reported to investors. Understanding how these sales feed into the wider profit and loss position of the business helps me contribute meaningfully to forecasting and strategy discussions.
How do you use benchmarking in preparing budgets?
I compare costs from similar schemes—such as consultant fees, planning application costs, and technical inputs—to inform our pre-planning budgets. This ensures we stay within expected ranges and can justify assumptions internally. Benchmarking also helps highlight potential cost overruns early.
