Accounting principles and prcoedures

Accounting principles and prcoedures

1. Profit and loss accounts / income statements

   • Summary of the business's income and expenditure transactions, prepared usually on an annual basis.
     • Turnover - cost of sales (gross profit)
       • minus admin expenses = operating profit
         • tax on op profit (net profit)
         • admin expenses - wages/NI/rent/service charges/rate/insurance/light and heat/motor/advertising/telephone

2. Cash flow forecasts

3. Balance sheets

   • Statement of the business's financial position showing assets and liabilities at a given date, usually at end of a financial year
     • fixed assets (tangible and intangible)
       • current assets (stocks/debtors/cash at bank and in hand)
         • creditors
           • total = net current assets
             • less total liabilities

4. Management accounts

   • Prepared for internal use by a business and not audited

5. Audited accounts

   • Prepared by a chartered accountant

6. cash flow statements

   • shows actual receipts and expenditure to include VAT

7. UK GAAP

   • Generally accepted accounting principles as agreed in the UK. Vals for inclusion in financial statements are prepared in accordance with UKGAAP

8. IFRS

   • International financial reporting standards
     • adopted by uk, fair value definition

9. FRS

   • Financial reporting standard
     • FRS 15 - Requires companies to revalue their tangible fixed assets
       • Owner occupied property is to be valued on the basis of existing use value
         • Investment properties are to be values on the basis of market value

10. IAS

    • International accounting standards