What are the main elements of the publsihed accounts?
Income Statement, Balance Sheet, Cash Flow Statement, Statement of Changes in Equity, Notes to the Financial Statements and Accounting Policies, Directors Report, Auditors Report
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Why do companies need to publish their accounts?
Legal requirement, Calculate how much tax needs to be paid, Directors can assess how well the business is performing, Stakeholders can benefit from them.
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What are the responsibilities of the directors?
Act within their powers states in the companies constitution, Promote the success of the company, exercise independenct judgement, Avoid conflic of interest, Not acccept benefits from 3rd parties, Disclose an interest in any proposed transactions
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What must the directors make sure the accounts show?
They show and explain the transactions made, Make sure the accounts are accurate, Make sure the accounts show a true and fair view of the financial position.
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What must the companies accounting records contain?
Day to day transactions both paid and received, Details of investments, Details of inventories held at the end of the year.
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What must the directors report contain?
Principle activities over the last year, Likely development for next year, Names of all directors, Charitable donations, Proposed dividends, Any industrial action, Include policies on: diabled workers, HASAW, payment terms for suppliers.
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What must the Auditors report contain?
Responsibility of the directors, Bases of Audit(how it happened), Opinion of auditors: unqualified opinion- shows a true and fair view OR qualified report- not right somewhere
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What are the limitations of published accounts?
Produced annualy-the fortunes of a company can change considerably, Have 6 months to publish accounts so information is out of date for users, Additional information isn't disclosed, Report on the past and don't help with the future performance.
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Who might be interested in the published accounts?
Shareholders, Loan/debenture holders, Trade payables, managers, employees, Government, Government agencies, The public, Stock market analysts, Pressure groups.
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Why might shareholders be interested in the published accounts?
Able to compare previous dividends, See how much profit s being retained for investmentand assess the future prospects of the company in terms of long term profitability and the security of their investment.
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Why might loan and debenture holders be interested in the published accounts?
Check od other lenders need to be repaid, to ensure interest is paid to date, See profit levels and asses the likelihood of revceiving interest and repayments.
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Whay might trade payables be interested in the published accounts?
Assess whether net assets provided sufficient liquidity and the short term stability of the company, See profit levels and the companies ability to repay, See if the company is expanding which increases purchases, Compare each years profit.
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Why might managers and employees be interested in the published accounts?
Assess if profits levels are high enough to afford pay rises and compare previous profits, Consider net assets which show the financial strength and indicate the ability to continue trading and continue employing.
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Other cards in this set
Card 2
Front
Why do companies need to publish their accounts?
Back
Legal requirement, Calculate how much tax needs to be paid, Directors can assess how well the business is performing, Stakeholders can benefit from them.
Card 3
Front
What are the responsibilities of the directors?
Back
Card 4
Front
What must the directors make sure the accounts show?
Back
Card 5
Front
What must the companies accounting records contain?
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