Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

APC Preperation - Building Surveying > Accounting principles and procedures > Flashcards

Accounting principles and procedures Flashcards

1
Q

What is a balance sheet

A

A balance sheet is a statement showing a buisness’s financial position at a point in time. It shows a buisness’s assets and liabilties at a given date, usually at the end of the financial year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the types of asset

A

Asset: thing that you will benifit from e.g. property.

Current Assets: assets to be used within 1 year.

Non Current Assets: non fixed items such as plant and machinery.

Liabilities: what a business owes due to past transactions e.g. wages and loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a profit and loss statement

A

A summary of a business’s income and expenditure transactions over a given period typically a year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a companys revenue

A

Income from buisness’s activities e.g. money from selling services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What a companys expenses

A

outgoings to provide services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is th GAAP

A

Used in the UK only Generally accepted accounting principles refer to a common set of 10 accounting, principles and procedures that companies and their accountants must follow when they compile their financial statements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are some exmaples of GAAP

A

Regularity,
Consistency,
Sincerity with an accurate repersentation of the companys financial situation,
Permanence of methods,
No expectation of compensation,
Prudence with semblance of speculation,
Continuity,
Dividing entries across appropriate periods of time,
Full disclosure in all financial reporting,
Good faith and honesty in all transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are international accounting standards (IAS)

A

Published between 1973 and 2001, issued by the international accounting standards committee.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the international financial reporting standards (IFRS)

A

Published 2001 onward. Set of international accounting standards, which state how particular types of transactions and other events should be reported in financial statements. Creates a common accounting language.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are some differences between GAAP and IFRS

A

GAAP is rules based whereas IFRS is principle based,
GAAP are more detailed than IFRS,
IFRS is open to interpretation whereas GAAP is more rigid,
IFRS is international and GAAP is Uk only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are some issues with IFRS

A

No one set of accounting methods has been universally adopted,
GAAP complex rules can cause unnecessary complications in the preperation of financial statements,
IFRS offers too much freedom so does not prescribe transparency of a companies financial health.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is IAS 40

A

AS 40 defines investment property as property that is held to earn rentals or capital appreciation or both.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is an auditor

A

Auditors perform internal financial and risk managements audits. Auditors also undertake external financial audits of commercial and public sector organisations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the responsibilities of an Auditor

A
  • Collecting, checking and analysing data
  • examining company accounts
  • gauging levels of financial risk
  • checking financial reports
  • preparing reports and financial statements
  • ensuring policies and regulations are followed undertaking wages reviews
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What types of reporting does the Companies Act 2006

A

GAAP & IFRS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are Management accounts

A

Management accounts are financial reports produced for the business owners and managers, generally monthly or quarterly, normally a Profit & Loss report and a Balance Sheet.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What does Companies Act 2006 require a company to submit annualy

A

A annual financial report

18
Q

What are financial accounts

A

A financial account is a component of a country’s balance of payments that covers claims on or liabilities to nonresidents, specifically with regard to financial assets.

19
Q

What is the difference between financial accounts and management accounts

A

Target audience - FA External, MA internal

Outlook - FA focuses on past events and transactions. MA focuses on improvements that can be made in the future.

Scope - FA is a broad summary of the whole business. MA is narrow as it focuses in detail on specific areas of the businesses.

Accuracy - FA accounting is a true and accurate representation. MA can often contain estimates and predictions.

Rules - FA must adhere to GAAP in used nationally and IFRS if used internationally. MA has no rules as only used internally.

20
Q

What is the CIS tax

A

Under the Construction Industry Scheme ( CIS ), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs ( HMRC ).

21
Q

What are ratios

A

Ratios are sets of numbers that are used to measure the efficiency and profitability of a company based on its financial reports.

22
Q

What are some examples of ratios

A

Ratios are used to analyse the efficiency of specific parts of a business. Examples are;

  • profitability ratios
  • debt ratios
  • market ratios
23
Q

What are the types of insolvency

A

cash-flow insolvency - a company cannot meet demands for payment as and when they are due.

balance-sheet insolvency - a company’s assets is less than the amount of its liabilities

24
Q

What is Insolvency

A

Insolvency is the state of being unable to pay the money owed, by a person or company.

25
Q

What is the difference between an balance sheet and a profit and loss statement

A

The balance sheet reports the assets, liabilities and shareholder equity at a specific point in time

A P&L statement summarizes a company’s revenues, costs, and expense

26
Q

Why should you keep accounts?

A

To keep track of money coming and money going out
To comply with Company’s Act 2006
So they can monitor profit and loss
To use when buisness planning

27
Q

What is meant by the terms Gross and Net

A

Gross profit is revenue minus the cost of goods

Net profit is revenue minus the expenses

28
Q

What is meant by the term depreciation

A

Depreciation is the systematic reduction in the recorded cost of a fixed asset. E.g mobile phones value decreases when a new model comes out.

29
Q

What is VAT

A

Value added tax, it is charged to companies with a turnover of more than £82,000.00

30
Q

What companies require auditing

A
  • Companies with a turnover of more than £6.5M
  • Public Companies.
  • Companies providing a financial service, such as insurance brokers.
31
Q

What are some signs of contractor insolvency

A
  • Overvaluing Interim Valuations.
  • Dissatisfied workforce.
  • Asking for upfront payment.
32
Q

What are some IAS that affect your industry

A

IAS 1 Presentation of Financial Statements,
IAS 11 Construction Contracts (superseeded by IFRS 15)
IAS 16 Property, Plant and Equipment,
IAS 40 Investment Property

33
Q

What is a Cash flow statement

A

We often request cash flow information from a contractor to ensure that they are not likely to go insolvent during a contract.

34
Q

How long are accounting records kept

A

6 years

35
Q

What is included in a companies account

A

Profit and loss statement - expenditures and income
balance sheet - assets and liabilities
Notes on accounts
Any accounts in relation to a wider group
Directors report - signed by secretary or director
Auditors report - signed and dated by them if required

36
Q

What is included within a balance sheet

A 
▪ Non-current assets
▪ Current Assets 
▪ Equity 
▪ Non-current liabilities
▪ Current liabilities
37
Q

What is included within a Profit and Loss Statement

A

▪ Revenues - Fees that were earned during the period of time
▪ Gains - Net amount related to transactions that are not considered part of the company’s main operations
▪ Expenses - Costs used up by the company in performing its main operations
▪ Losses - Net amount related to transactions that are not considered part of the company’s main operating activities

38
Q

What are some types of audits

A
  • Financial Audit
  • Forensic Auditing
  • Tax Auditing
  • Operational Audit
  • Compliance Audits
39
Q

What is equity

A

Equity is the ownership of any asset after any liabilities associated with the asset are cleared.

40
Q

What is the difference between tangable and intangable assets

A

Tangable - Physical assets such as vehicals,

Intangable - Item of lacks physical substance - computer software, licences, trademarks,

APC Preperation - Building Surveying (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions