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Flashcards in Accounting & Business Deck (27)
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1

What did you learn in your Accounting (CPD) training?

That the objective of creating accounts is to provide information on a business’s financial position. Learnt about some of the accounts prepared, e.g. balance sheets and profit and loss accounts.

2

What is a balance sheet?

- Statement of a businesses financial position
- Shows assets and liabilities at a given date (usually end of financial year)
(Assets – cash, property, debtors, other investments)
(Liabilities – borrowings, overdraft, loan and creditors)

3

What is a profit and loss account?

- Summary if businesses income and expenditure, usually annual
- shows whether a company made a profit

4

What is a cashflow statement?

- Shows actual receipt and expenditure (incl. VAT)
- shows whether a company generated cash

5

What are current and non-current assets?

(Assets – cash, property, debtors, other investments)
Current = to be converted to cash within 1 year, e.g. a property sold soon.
Non-current = not likely to be converted to cash within 1 year e.g. trademarks, property, plant and equipment

6

What are current and non-current liabilities?

(Liabilities – borrowings, overdraft, loan and creditors)
Current = amounts owed within 1 year, e.g. overdrafts, short-term loans
Non-current = long-term financial obligations e.g. deferred payments, long-terms loans

7

What is the difference between Management Accounts and Audited (Company) Accounts?

Management – prepared for internal use by a business and are NOT audited
Audited – prepared by a Chartered Accountant
Statutory – mandatory for limited companies, generically formatted, requested by HMRC

8

What is UKGAAP?

UK Generally Accepted Accounting Principles – valuations for inclusion in financial statements are prepared in accordance with this. Savills uses UKGAAP.

9

What do you know about IFRS 16?

Effective after 1 January 2019.
Brought in as transparency measure.
Full cost of all leases to be recorded on balance sheet. An occupiers rent recognised as a liability, though service charges would be accounted seperately.
Leases of less than 12 months or shorter are exempt.

10

The contents of a plc's company accounts?

- Chairmans Statement
- Independent auditors report
- Income statement (profit and loss account)
- Statement of financial position (balance sheet)

11

Where is the Net Profit found in the financial accounts?

On the profit and loss accounts (income statement)

12

How have Savills performed this year?

A good performance despite market uncertainty in UK & Hong Kong. Strong growth in less transactional services -
Property Management, transaction advisory

13

What is going on in the local housing market?

2019 overshadowed by brexit uncertainty. prime market highlights affordability issue for owner occupiers, with many buying in cheaper hinterland sites. These sales underpinned by HTB. Strong start to 2020 due to reduced politcal uncertainty, however Covid 19 has had an effect on the global economy which will ripple into housing market on a macro and micro level.

14

Who can prepare audited accounts?

Chartered or certified accountants.

15

Why is it important to understand accounts?

It is important I understand accounting principles in order to understand my department’s performance, and producing forecasts of expected turnover for the upcoming quarter and year.
Also I am aware it is important for assessing covenant strength and for the profits method of valuation.

16

What are the main different types of fee structure you have used?

• Percentage fee based on value of asset bought or sold
• Fixed fee
• Hourly rate

17

What is your company’s strategy?

The current strategy is to grow organically and in cases through acquisition of smaller businesses in order to diversify our service offering, promote technology and increase our presence in key geographical areas. Cluttons ME business would be a recent example.

18

What is your company’s strategy?

The current strategy is to grow organically and in cases through acquisition of smaller businesses in order to diversify our service offering, promote technology and increase our presence in key geographical areas. KKS (Design & Workplace Consultancy) is an example. Integrated Currells (6 offices in London).

19

What are the applicable accounting standards in the UK?

International Financial Reporting Standards (2015)
UK GAAP has to accord with IFRS which has different ways of reporting the information
IFRS 16 requires the full cost of leases to be outlined

20

What are the main types of ratio analysis used to assess a company’s financial strength?

• Liquidity – the ability of the company to pay its way (solvency). More companies fail due to cash flow than any other reason.
• Investment/shareholders – information to enable decisions to be made on the extent of the risk and the earning potential of a business investment.
• Gearing – information on the relationship between the exposure of the business to loans as opposed to share capital.
• Profitability – how effective the company is at generating profits given sales and/or its capital assets.
• Financial – the rate at which the company sells its stock and the efficiency with which it uses its assets.

21

What types of taxation are there?

1. Stamp Duty Land Tax – residential stamp duty is charged on incremental bands, whilst non residential is charged on transactions over £150,000 - at 5% for transactions over £500,000
2. VAT – a tax on services and goods; a company has to register for VAT if their annual turnover is over £82k in a 12 month period; if a property is elected for VAT the landlord can recoup VAT paid on services or works to that property; new build properties are zero rated for VAT so any VAT paid can be claimed back
3. ATED – Annual Tax on Enveloped Dwellings; bought into tax properties held by offshore companies

22

Does the RICS have any guidance on money laundering?

RICS professional standards and guidance, global - countering bribery and corruption, money laundering and terrorist financing - February 2019

23

National picture on the property market?

▪ Sluggish GDP growth (1%) with continuing risk of
Brexit affecting market confidence
▪ Weak sterling and comparative pricing maintains
attraction to non domestic investors
▪ ‘Boris bounce’ post the Election, buoys confidence in
December (may be tempered by Covid 19)

24

Why are assets and liabilities important to consider?

As this would highlight the worth of an individual or firm. This would be used when establishing covenant strength.

25

What is your company's business strategy?

- Emphasis on the growth of the non-transactional business. (Property management & consultancy)
- Entering new markets and geographies- Develop EMEA, North America, accelerate growth in
core markets in Asia Pac.

26

What has been your job in your team?

I have been a graduate surveyor in the new homes team in Cambridge. As a team, we advise throughout the whole development process from inception to completion. My role was to keep abreast on the market and produce research for consultancy reports giving recommendations on values, mix and design. Which often resulted in a winning agency. My role would comprise operating on a variety of development sites, assisting with marketing, sales and handovers. Once qualified, I look to take more responsibility and lead on larger sites.

27

How would you make a good presentation?

Understand the requirement - subject, audience, timings.
Organisation - use powerpoint, practice presenting
Knowledge - gather data, verify and analyse - be clear and concise
Confidence - speak clearly, know your subject.
Questions - encourage to take questions.