Accounting & Procedures

Question 1

What is IAS?

Answer 1

All companies need to use UK-adopted ‘international accounting standards’ (IAS)

Question 2

Limited companies should do what?

Answer 2

1. Prepare full annual accounts - balance sheet / profit & loss/directors report.
2. file company tax return with HMRC & pay corporation tax.

Question 3

what is a balance sheet?

Answer 3

Its a statement of financial position at that POINT IN TIME.
It shows the company total assets, any liabilities & equity.

Question 4

what is profit & loss account?

Answer 4

This is an INCOME STATEMENT
and it shows the gross & net profit.

Total income – total expenses = profit.

done either monthly, 1/4 or yearly.

Question 5

cashflow statement?

Answer 5

This is not a legal requirement, but will look at forecasting, looking at expenditure, sales and cash position each month.

Question 6

What is the Articles of Association

Answer 6

Companies must have constitutions so that the three KEY STAKEHOLDERS — shareholders, directors, and the company itself — know what each party’s rights and obligations to the others are. The articles of association (often simply called ‘the articles’) will likely specify most of these rights.

Question 7

What is bad debt?

Answer 7

• Bad debt is money that is owed to a company which is unlikely to be paid.
• This would be recorded as an expense.
• Customer may refuse to pay due to Negligence, Financial crisis, Bankruptcy for example..