RICS APC Revision Guide Final Interview Assessment Practice Questions

Auditing is a fundamental process that ensures the accuracy and reliability of financial statements. An audit involves a thorough examination of a company's financial records by an independent party, often a chartered accountant. The primary objective is to provide assurance that the financial accounts present a fair and true view of the company's financial position, performance, and cash flows.

Imagine a small UK property company named "Brick & Mortar Estates" that owns apartments for rent. Here's a simplified cash flow statement for them, assuming a quarter (e.g., January-March):

A cash flow statement is like a detailed log of a company's cash incomings and outgoings over a specific period. It shows you where the money came from (inflows) and where it went (outflows) during that time.

Imagine "Brick & Mortar Ltd." owns a block of flats in London. This is a simplified P&L for one year:

A profit and loss statement (P&L) is like a report card for a company's performance over a specific period, usually a quarter or a year. It tells you how much money a company made (revenue) and how much it spent (expenses) during that time, ultimately revealing its profit or loss.

Assets:

A balance sheet is like a snapshot of a company's financial health at a specific point in time. It's like a photograph that captures what a company owns (assets), owes (liabilities), and the difference between the two (net worth or equity).

Accounting principles are the ground rules used to prepare financial statements that are consistent, reliable, and comparable. They ensure financial information is:

Here's a breakdown of how property/assets are treated in an entity's accounts:

Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are the two most widely used sets of accounting standards in the world. While they share some similarities, there are also some key differences between them.

While not directly prescribing accounting principles, the RICS does emphasise the importance of understanding and applying fundamental accounting concepts within their professional practice. Here are some key areas where basic accounting principles come into play for RICS professionals: