Chapter 13

Question 1

GAAP

Answer 1

UK generally accepted accounting practice

Question 2

What do listed companies need to do?

Answer 2

must prepare financial statements under the international accounting standards

Question 3

Do other companies need to prepare financial statements?

Answer 3

they may prepare it under UK GAAP or opt out using international accounting standards if they wish

Question 4

What is the GAAP?

Answer 4

rules, regulations, concepts and conventions which govern accounting in the UK

Question 5

What is UK GAAP made up of?

Answer 5

UK accounting standards

company law

Question 6

Who is responsible for issuing UK accounting standards?

Answer 6

FRC financial reporting council

Question 7

Who was it before the FRC?

Answer 7

accounting standards board

Question 8

What does the companies act in the UK require companies to prepare?

Answer 8

annual financial statements in

specific formats

which must show a true and fair view

Question 9

What are the documents required in the financial statement?

Answer 9

profit or loss account

balance sheet

directors report

auditors report

Question 10

IASB

Answer 10

international accounting standard board

Question 11

What does the IASB do?

Answer 11

set international standards

Question 12

What does the IASB comprise of?

Answer 12

International financial reporting standards (IFRS standards) or international accounting standards (IAS standards)

Question 13

What’s the difference between IFRS standards and IAS standards?

Answer 13

they carry the same status but IAS are older

Question 14

What does the international term statement of profit or loss translate to UK?

Answer 14

profit or loss account or statement income

Question 15

What does the international term revenue translate to UK?

Answer 15

turnover

Question 16

What does the international term finance costs translate to UK?

Answer 16

interest payable

Question 17

What does the international term statement of financial position translate to UK?

Answer 17

balance sheet

Question 18

What does the international term non-current asset translate to UK?

Answer 18

fixed asset

Question 19

What does the international term property, plant, equipment translate to UK?

Answer 19

tangible assets

Question 20

What does the international term carrying amount/carrying value translate to UK?

Answer 20

net book value

Question 21

What does the international term inventory translate to UK?

Answer 21

stock

Question 22

What does the international term receivables translate to UK?

Answer 22

debtors

Question 23

What does the international term allowance for receivables translate to UK?

Answer 23

provision for doubtful debts

Question 24

What does the international term irrecoverable debt translate to UK?

Answer 24

bad debt

Question 25

What does the international term cash and cash equivalent translate to UK?

Answer 25

cash at bank/in hand

Question 26

What does the international term retained earning translate to UK?

Answer 26

profit and loss account

Question 27

What does the international term non-current liabilities translate to UK?

Answer 27

creditors falling due in more than 12 months

Question 28

What does the international term loan notes translate to UK?

Answer 28

debentures

Question 29

What does the international term current liabilities translate to UK?

Answer 29

creditors falling less than 12 months

Question 30

What does the international term payable translate to UK?

Answer 30

creditors

Question 31

What is the top part of the UK financial position statement/balance sheet?

Answer 31

top part is the statement of financial position showing total net assets

Question 32

equation for total net asset

Answer 32

fixed asset + current asset - current liabilities - long term liabilities

Question 33

What is shown at the bottom of a UK statement of financial position/balance sheet?

Answer 33

share holders funds

Question 34

share holders funds equation

Answer 34

share capital + reserves