Grappling with metaphysics in company accounts

Article Abstract:

Accounting practices of United Kingdom companies vary, as is shown by the case of Carpetright and Allied Carpets, the biggest two carpet retailers in the UK. Allied Carpets suspended its stocks from trading becasue its accounting rules had not been followed. Sales should be registered when they are delivered to customer, but around 8 million pounds sterling of sales had been registered after they had been delivered to the store, but not the customer. These orders had been paid for. Carpetright, in contrast, registers sales when orders have been placed. Differences between companies would not be so important if accounting policies were consistent, but this is not always the case.

Floor covering stores, Finance, Retail industry, Retail trade, Rug and carpet industry, Carpetright PLC, Allied Carpet Stores Ltd.

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Making sense of cash flow and capital spending

Article Abstract:

Corporate cashflow generated for stockholders is a key figure in corporate accounts, but there is no definition in the United Kingdom for free cash flow. Companies do not have to calculate this figure according to a formula. There are different views on whether free cash flow should be stated after or prior to capital spending. If capital spending is seen as a necessity, then it should be stated after, and if capital spending is seen as optional, it should be stated before. Some capital spending is compulsory, and some optional, and few companies show the difference, though this would be helpful.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Financial Management, Measurement, Cash flow

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Bringing goodwill to account

Article Abstract:

United Kingdom accounting standards are to be changed and this will affect the profit levels reported by some companies. The Accounting Standards Board sets standards in the UK and has told firms to change the treatment of intangible assets and goodwill. Companies that do not comply could lose stock listings. Some companies will have a large amount of goodwill to write off, and companies with large goodwill amortization charges are those that depend more on acquisitions to grow.

Reporting & Disclosure, United Kingdom, Financial statements

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