U9

Question 1

Explain accounting process.

Answer 1

Accounting process starts with inputs, like recipts and invoices into specialized accounting software. Next these entries are recoded chronologically into ‘journals’. These journal are posted into ledgers. Based on them there are generated trial balance at the end of each accounting period. Then accountand check correction of figures,it’ll ue directly to prepare main financial statements. Finally financial statements of big corparations need to be checked by external auditors

Question 2

Explain Profit and loss account.

Answer 2

(= income statement \ P&L) summarizes business activity over period of time. It begins from revenue generated over period of time, next subtract all costs related to producing that revenue.

Question 3

Explain Balance sheet

Answer 3

it reports the company financial condition on a specific time. The basic equation that need to be balance is: Assets = Liabilities + Shareholders’ equity

Question 4

Explain cash flow statement

Answer 4

Shows the real cash that is available to keep the business runing day to day

Question 5

invoice

Answer 5

sales document

Question 6

recipt

Answer 6

purchasing document

Question 7

records

Answer 7

data unit

Question 8

journal

Answer 8

chronological set of financial records

Question 9

ledger

Answer 9

journals divided in specific cathegory

Question 10

trial balance

Answer 10

summary of ledger information

Question 11

auditor

Answer 11

external person who checked correctnes of finansial statement

Question 12

creditors

Answer 12

sb who lend you sth

Question 13

asset

Answer 13

anything of value owned by the business

Question 14

liability

Answer 14

any mount owed to creditor

Question 15

shareholders equity

Answer 15

(owners’ equity) consits of share capita and retained profit

Question 16

figures

Answer 16

numbers in financial statements

Question 17

current liabilities

Answer 17

liabilities able to pay during one year

Question 18

long-term liabilities

Answer 18

liabilities that are expexted to pay later then one year

Question 19

current assets

Answer 19

assets that are able to exchange to money within one year

Question 20

fixed asset

Answer 20

asstets that are expected to pay later then one year

Question 21

working capital

Answer 21

( = current asstets - current liabilites) quick measure of whether there is enough cash freely avalilable to keep business runing day to day

Question 22

Explain reasons of cash flow problems

Answer 22

• unexpected late payments
• unforeseen costs
• unexpected drop in demand
• investing too much in fixed assets

Question 23

Explain solution for cash flow problems

Answer 23

• credit control
• stock control
• expenditure control
• sales promotion to generate cash quickly
• factoring

Question 24

Explain structure of accounting department

Answer 24

Chief Financial Officer is on the Broad. 3 senior managers are below report to CFO: Financial Controller, Treasuer, Chief Accounting Officer

Question 25

Resoponsibility of CFO

Answer 25

Represents Accounting Department on the Broad.

Question 26

responsibility of financial controler

Answer 26

- planing: preparing forecast and budgets - monitoring: comparing planned spending with actual spending - producing financial data for the senior managment team - analysing major investment decision

Question 27

responsibility of treasuer

Answer 27

- managing cash flow - raising new funds

Question 28

responsibility of chief accounting officer

Answer 28

- keeping the company books - preparing financial statements - preparing tax returns - developing strategies to minimalize taxes

Question 29

Explain possible sources of new funds

Answer 29

- debt financing (short term: trade credit, bank loan) (long term: issuing bonds) - equity financing: reinvested earnings, sale of assets, issue of shares

Question 30

cost/profit center

Answer 30

discrete business units where business are spent or profits are generated

Question 31

Variance analysis

Answer 31

comparing planned costs/income with actual costs/income

Question 32

Costing methods

Answer 32

standard vs marginal costing

Question 33

ratio analysis (users/types)

Answer 33

to analyse performance in more depth to comapare comany in the same industry: liquidity, ratios, profitability ratios, leverage (debt) ratios, activity ratios

Question 34

revenue

Answer 34

(= income / turnover / sales / the top line )

Question 35

cost of goods sold

Answer 35

(= direct costs) includes manufacturing costs, blue-collar

Question 36

blue-collar

Answer 36

salaries of manual workers

Question 37

operational expenses

Answer 37

(= indirect costs / overhead) include salaries of sales and office staff, marketing costs, utility bills

Question 38

non-operating income

Answer 38

include profits from investment in other companies

Question 39

EBITDA

Answer 39

Earning Before Interest, Tax, Depreciation and Amortization

Question 40

Earnings

Answer 40

(= profit / bottom line)

Question 41

Depreciation/Amortization

Answer 41

Both are very simillar. 'Depreciation' can refer to the loss of value in tangoble asstes and amortization to the loss in value of an intagible asset

Question 42

interest

Answer 42

refers to the money paid to the bank for loans

Question 43

dividends

Answer 43

money paid to the ban for loans

Question 44

retained profit

Answer 44

it transferred to the Balance Sheet where it joins the amounts from previous years

Question 45

accounts recivable

Answer 45

Amount owed to the business by customers (= creditors)

Question 46

inventory

Answer 46

value of raw materials & stock

Question 47

current assets

Answer 47

includes marketable securities (shared intended for disposal within one year)

Question 48

fixtures

Answer 48

part of a building that cannot be moved, such as light

Question 49

fixed assets

Answer 49

include long-term financial investemnts

Question 50

intangible assets

Answer 50

include patents, trademarks & goodlwill (reputation, contacts and expertise of companies that have been bought)

Question 51

bank debt

Answer 51

(= loan capital) also includes any overdraft (= temporary negative balance)

Question 52

accountant payable

Answer 52

the money owed to suppliers

Question 53

Accrued

Answer 53

items are those where an expense has been incured, but the money is not yet paid

Question 54

provision

Answer 54

one-time payments that are not part of regulat operations

Question 55

mortgage

Answer 55

long-term bank loan

Question 56

principal

Answer 56

amount raised by issuing the bonds

Question 57

share capital

Answer 57

(= common stock)

Question 58

retained profil

Answer 58

(= reserves / retained earnings) an amount accumulated over several years

Question 59

owe

Answer 59

by winnym

Question 60

write off

Answer 60

odpisać

Question 61

recivable

Answer 61

możliwy do odzyskania

Question 62

payable

Answer 62

do zapłaty

Question 63

accured expenses

Answer 63

zaksięgowane wydatki

Question 64

leverage

Answer 64

dźwignia finansowa

Question 65

blue collar

Answer 65

błęknitny kołnierzyk

Question 66

direct / variable cost

Answer 66

koszt bezpośredni / zmienny

Question 67

fixed / operating cost

Answer 67

koszty stałe / operacyjne

Question 68

indirect / direct cost

Answer 68

koszty pośrednie/bezpośrednie

Question 69

capital expenditure

Answer 69

wydatki kapitałowe

Question 70

mark up / marginal cost

Answer 70

marża/koszty krańcowe