1. what is the basis preparation of the accounts ?
the basis preparation of the accounts is the accounts are prepared under the historical cost convention and comply with all applicable UK accounting standards.
2. what convention are the accounts prepared under ?
convention are the accounts prepared under are historical cost convention and comply with all applicable UK accounting standards
3. what is the historical cost convention ?
historical cost convention is the accounts incorporate the audited assets and liabilities of subsidiary companies and the groups’s share of associated companies for the year.
4. what is turnover ?
turnover is goods and services invoiced during the year to external customers and associated companies, excluding value added tax and other taxes, less trade discounts
5. what is exluded from turnover ?
excluded from turnover are value added tax and other taxes
6. how are exchange adjustments dealt with ?
exchange adjustments arising directly from the translation of balance sheet items are taken directly to reserves, all other exchange differences are included in the profit and loss account
7. how is depreciation normally applied ?
depreciation normally applied if calculated so as to write off the cost of fixed assets ( except freeholdand) evenly over their estimated useful lives. Estimated useful lives are reviewed periodically, taking into account commercial and technological obsolescene as well as normal wear and tear
8. How are tangible and intangible assets hendled ?
Estimated useful life of more than 12 months. Such long – item assets will be tangible or intangible.
Answer these questions in your own words
a) Why are the tax authorities interested in the accounts of a business ?
Because the goverment taxes business profits and uses the proceeds to pay of free education, the national health servises, unemployement pay, old age pensions and national defense among other things
b) Who benefits when a business makes a profit ?
Of course the companies and all labour, and goverment
c) Why is cash flow important to a business ?
In other to the firm can be know how much money and payment in and out are vital to a business
d) How are credit ratings determined ?
Specific credits limit will be allocated to each customer. Thus a new customer might be allowed to have an outstanding standard account for there months, who has been a satisfactory customer for more than year, has a limit or twicethat amount
e) What should a salesperson do before selling goods on credit ?
Before any order is passed through to the dispatch deparment in the factory, it will be checked againts the customer and the credit rating, salesperson are not allowed to give customer credit when these limits would be exceeded, unless there is aspecial clearance from the sales manager
f) What does a credit control department do ?
A credit control department to monitor the granting of credit and the collection of debts
g) How does factoring operate ?
Where by specialist companies are approached with a view to their purchasing the book debts at a discount, they will collect the debts and keep any accounting records required
h) Why do you think a sales manager and a credit control manager might sometimes come into conflict ?
I think nothing internal control and not join together for management