Accounting Principles and Procedures – Level 1: Flashcards Preview

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Flashcards in Accounting Principles and Procedures – Level 1: Deck (6)
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1
Q

Can you briefly explain the difference between a Profit & Loss statement and a balance sheet?

A
  • A balance sheet shower assets and liabilities including shareholder equity at a specific time. A profit and loss statement summarises a companies revenues, costs and expenses during a specific period of time.
2
Q

• What is IFRS?

A

International Financial Reporting Standards which sets common rules so that financial statements can be transparent and comparable around the world.

3
Q

• Can you briefly describe what a cash flow statement is and why its useful to businesses?

A
  • A cash flow statement merges balance sheet and income statements to show actual receipts and expenditure including VAT.
  • It provides details of income and expenditure.
  • Helps on decision making.
  • Allows a company to plan ahead.
  • It helps with budgeting.
4
Q

• What do you understand by the accruals concept?

A
  • This is the recording or income and expenditure when they occur and not when they are received or paid.
5
Q

• What are the obligations that a company has with Companies House and HMRC along with the VAT threshold?

A
  • Accounts have to be submitted annually
  • Returns are submitted quarterly.
  • VAT threshold is £85,000.
6
Q

• What current challenges is Covid and/or Brexit bringing to Accounting Principles?

A
  • Lots of sectors have been decimated in the pandemic.
  • Personally, I have not had any problems, but that could all change once the stamp duty comes to an end. Although I await to see the impact of 95% mortgages.