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Skweeky
06-09-2007, 07:25 AM
Can you just quote the most commonly used terms withing an accounting department?

Gripper
06-09-2007, 08:18 AM
Fiscal?

Agrajag
06-09-2007, 09:25 AM
Trial

Skweeky
06-09-2007, 11:49 AM
No... I mean things like 'sales ledger', 'VAT' etc...

Alien5
06-09-2007, 12:32 PM
etc...

Biggles
06-09-2007, 03:09 PM
Skweeks

Basic records are "ledger entries" sales, materials, assets etc.,

It is important that income and expenditure is "matched" to correct periods of reporting and activity.

"Variance Analysis" (were the forecasts correct? - if not why not?) is usually undertaken to provide Management Information and allow managers to make decisions (hah!)

ABC - some firms use "Activity Based Costing" matching all relevant costs to specific activities rather than spreading them as an "Overhead" This sounds great and dandy but is a bugger to do and usually has Finance sections running around like blue-arsed flies.

"Profit and Loss Statement"
and
"Balance Sheet" are the two big reporting documents and a lot of day to day work on the ledgers is used to compile these.

also important are

"Depreciation Policy" how a company treats its assets on the Balance Sheet and the amount carried into the Profit and Loss Statement each year.

"Capital Allowances" what the Treasury allow against asset purchases ( and can be set against tax liabilities)

"Corporation Tax" (and why not paying is a bad idea)

Distribution of Profits

Profits after tax have to be dealt with - some to shareholders, some to set against known asset replacement and perhaps some to invest in other companies/take overs etc., - the latter could actually be a more beneficial use of the money for the shareholders in the longer term.

"IAS" - International Accounting Standards or Teh Rules (as they are known) each standard deals with a specific area i.e Reporting to Shareholders or Treatment of Assets and each has a number.

Finally, a really important word if you are job hunting

"Governance"

Read up on the Cadbury Report and the US Sarbanes-Oxley

These follow on from major corruption scandals like Enron and set new standards of Corporate Accountability to protect Shareholders and other Stakeholders

Stakeholder theory is also an interesting modern concept but perhaps a bit OTT for your porpoises.

I hope this helps.

I am going to have to go and have a shower now - accountancy on a Saturday - I am unclean :(

Skweeky
06-09-2007, 03:12 PM
Basically, I'm going for a job interview with some company that is looking for someone who speaks Dutch, has some knowledge about acccounting ( I know about sales ledgers, balance sheets, active and passive etc) and can do administration as well.

They'd better bloody give me the job :angry:

Skweeky
06-09-2007, 03:15 PM
Just to clarify, decpreciation policy refers to the period of time a company takes to write off a certain asset and thus the period of time they pay tax on this asset?

It's bloody hard to try and make out what is what if you learnt everything you know about the subject in a completely different language :huh:

Biggles
06-09-2007, 03:15 PM
Basically, I'm going for a job interview with some company that is looking for someone who speaks Dutch, has some knowledge about acccounting ( I know about sales ledgers, balance sheets, active and passive etc) and can do administration as well.

They'd better bloody give me the job :angry:

If you know the basics an overview of International Accounting Standards and Governance will mean you can demonstrate that you are up to date with the hot topics in Accountancy (if that is a fair and reasonable use of the word hot)

Biggles
06-09-2007, 03:19 PM
Just to clarify, decpreciation policy refers to the period of time a company takes to write off a certain asset and thus the period of time they pay tax on this asset?

It's bloody hard to try and make out what is what if you learnt everything you know about the subject in a completely different language :huh:

Depreciation is how the Company writes off the asset and treats it in the accounts it shows to the owners (the shareholders)

For tax purposes the company has to use the Treasury rules which are called Capital Allowances. It is these calculations that are used to set against the tax owed not the company's depreciation policy. Part of the good Governance thing is that the depreciation policy has to be fair and reasonable - it would be easy to present the figures to the shareholders in an attractive light by saying their computers will last 100 years and there has been no asset "Impairment"

I'm "" the accountancy words btw.

Skweeky
06-09-2007, 03:31 PM
Right so for example:

If you bought a delivery van for use in the business you could decide in the first year to use 40% ( for example)of its value to be put against any income?
You can then spread the remainder over the next few years?

Biggles
06-09-2007, 03:31 PM
I hope the above helps - it all makes sense to me (or is that sence?) but then that is not saying much :blink:

thewizeard
06-09-2007, 03:35 PM
No... I mean things like 'sales ledger', 'VAT' etc...

That's so..boring how about..Jupiler erm...Westermalle and white widow? :)

Biggles
06-09-2007, 03:37 PM
Right so for example:

If you bought a delivery van for use in the business you could decide in the first year to use 40% ( for example)of its value to be put against any income?
You can then spread the remainder over the next few years?

For the Balance Sheet yes you could although the two most popular methods are

Straight Line - same amount each year
Reducing balance say for example 20% of the outstanding balance each year.

When sold the item is netted off

Original purchase price less Sale price and
Depreciation to date (stupid thing didn't show the columns)


The figure that balances the two sides is either a profit or loss and is shown in the P&L account

For tax purposes the Treasury set the times and percentages and although used for tax calculation are not shown on the balance sheet and P&L - although the finalised tax owed is.

Skweeky
06-09-2007, 03:37 PM
Also, can you just confirm that the liquidity ratio is the amount of actual money (or goods that can be turned into money immediately) in proportion to their assets ( ie buildings, machinery etc...)

Skweeky
06-09-2007, 03:38 PM
Biggles, you can't ever tell anyone about this :scared:

I think we're safe for now, no one will read any of this nonsense

Skweeky
06-09-2007, 03:41 PM
Right, I'm not going to stress about it

I've spent 4 years of my life, 5 hours a week, filling in sales ledgers and working out balance sheets and profability ratios.
I have a bit of paper that says I can do it so there :snooty:


BTW: If you happen to know the accountant from New Pig in Hamilton, can you just tell him to hire me?

Biggles
06-09-2007, 03:47 PM
Also, can you just confirm that the liquidity ratio is the amount of actual money (or goods that can be turned into money immediately) in proportion to their assets ( ie buildings, machinery etc...)

No to get your liquidity ratio you divide Current Assets by Current Liabilities

There are two versions the Acid Test version is Current Assets less Stock divided by Current Liabilities

In both, long term assets (buildings etc.) and long term liabilities (bank loans etc.) are excluded as neither are immediately available to increase or impair the calculation.

The purpose of the liquidity calculation is to check to see if there is a cash flow problem. A business that has great long term potential but can't pay its suppliers or staff today usually fails unless it can get further backing.

Biggles
06-09-2007, 03:49 PM
Biggles, you can't ever tell anyone about this :scared:

I think we're safe for now, no one will read any of this nonsense

I can see my street cred such as it was plummeting like a lemming on a family picnic

Biggles
06-09-2007, 03:51 PM
Right, I'm not going to stress about it

I've spent 4 years of my life, 5 hours a week, filling in sales ledgers and working out balance sheets and profability ratios.
I have a bit of paper that says I can do it so there :snooty:


BTW: If you happen to know the accountant from New Pig in Hamilton, can you just tell him to hire me?

We buy our spill kits from New Pig.

thewizeard
06-09-2007, 03:53 PM
/me yawns but remains riveted ... I love teh numbers..

Skweeky
06-09-2007, 04:06 PM
Ok...

What should liquidity and solvency be at for a company to be deemed succesful?

I vaguely remember one of them is calculated in relation to 1...


Blast... I used to be brilliant at this stuff

Just shows you how much you forget by not using it :(

Biggles
06-09-2007, 04:18 PM
Ok...

What should liquidity and solvency be at for a company to be deemed succesful?

I vaguely remember one of them is calculated in relation to 1...


Blast... I used to be brilliant at this stuff

Just shows you how much you forget by not using it :(

The liquidity ratio is generally shown as say 2:1 - that is there are twice the assets to liabilities. Once you get below 1:1 you are in trouble. But I recall a ratio of 3:1 as being a nice comfort zone. Too high and one would question the fiscal astuteness of the Finance Director - that money could be more gainfully employed in higher return activities.

I don't use these much either and this is a bit of trip down exam memory lane for me.