Summary of Experience Accounting

Question 1

What does a balance sheet show us?

Answer 1

assets and liabilities and ownership equity

‘Worth’ of a company at a specific point in time. On an annual basis.

Question 2

What does a profits and loss statement show us?

Answer 2

income and expenditure

An income statement shows what a company earned and spent over a period of time.

• strategic planning, budgeting and financial forecasting

Question 3

gross profit

Answer 3

total revenue - cost of sales

Question 4

net profit

Answer 4

total revenue - cost of sales - operating expenses - tax (corporation)

Question 5

difference between audited accounts and management accounts?

Answer 5

• audited have been done by a chartered accountant with ‘companies act 2006’
• management accounts are completed internally and are not audited.

Question 6

Dunn and Bradstreet?

Answer 6

• Financial Strength
• Risk

Question 7

what is the profits test?

Answer 7

3x profit should exceed the annual rent

Question 8

Liquidity ratio?

Answer 8

current Assets / current liabilities

Question 9

What is Cash Flow statement?

Answer 9

Incoming cash and outgoing cash

• good for business planning

Question 10

IFRS, what is this?

Answer 10

International Financial Reporting Standards

• makes it easier to compare businesses around the world

Question 11

Principles of GAAP?

Answer 11

General Accepted Accounting Principles

1 Principle of Regularity
2 Principle of Consistency
3 Principle of Sincerity
4 Principle of Permanence of Methods
5 Principle of Non-Compensation
6 Principle of Prudence
7 Principle of Continuity
8 Principle of Periodicity
9 Period of Materiality
10 Principle of Utmost Good Faith

Question 12

Talk me through the example in 2022 with a tenant struggling and you order a payment plan/rent free?

Answer 12

• requested companies accounts
• evident significant losses had taken place
• it was evident these were pandemic related and likely only temporary.
• sent to our third party accountant to review and they recommended a rent free period.
• this was legally documented by solicitor via side letter

Question 13

what is IFRS13?

Answer 13

Fair Value

Question 14

What is IFRS16?

Answer 14

lease more than 12 months goes onto a balance sheet which was before on a income statement

Question 15

What is the result of IFRS16?

Answer 15

• could increase net debt when brought onto balance sheet
• could result in entities taking shorter leases to reduce net debt on BS

Question 16

Difference between GAAP and IFRS?

Answer 16

• GAAP is rule based. IFRS more principle based and allows more interpretation.

Question 17

What sort of assets would you find on balance sheet?

Answer 17

Current
- cash
- inventory

Fixed
- plant and machinery
- land

Question 18

Type of liabilities on a balance sheet?

Answer 18

current liabilities (paid within 1 year)
- Short term debt
- credit card

non current liabilities
- mortgages
- long term loans

Question 19

What is ownership equity on a balance sheet?

Answer 19

• contributed capital
• retained earnings