1
Q
Benefits of preparing a cash flow statement
A
- Shows cash inflows & outflows for past year
- Shows profits don’t always =cash
- Aids financial planning
- Complies w/ legal requirements
2
Q
Cash Expenses
A
reduce profit and cash, e.g. wages
3
Q
Non-cash expenses
A
reduces profit only, e.g. depreciation
4
Q
Cash Gain
A
Increases profit and cash, e.g. interest received
5
Q
Non-cash gain
A
Increases profit only,e.g. profit in sale of a fixed asset
6
Q
Give examples of why profit does not always equal cash
A
Depreciation, profit on sale of fixed asset, cr sales / purchases, sale/purchase of fixed assets, capital, drawings.
7
Q
Accounting obligations of a large public company
A
- Provide full set of a/cs, cash flow statement and balance sheet at AGM
- Provide notes w/ a/cs
- Have a/cs audited
- File full set of a/cs and balance sheet w/ registrar of companies
- Present annual report to shareholders at AGM
8
Q
Responsibilities of director of a plc
A
- Comply w/ Companies Act: keep a/c records to enable financial statement
- Prep annual financial statements
- Select accounting policies
- Sign financial statements
- Safeguard assets of plc
- Publish Final a/cs and cash flow statement
- Present annual report to shareholders at AGM
9
Q
Accounting Standards Board
A
- Issue new standards called Financial Reporting Standards (FRS)
- Amend and withdraw old accounting standards
10
Q
Financial Reporting Standard (FRS) 1
A
Issued in 1991, revised in 1996, requires large companies to prepare a cash flow statement for each activity period
