3.4 final accouts Flashcards
purpose of managment internal stakholders
people in the organisation plan and control of activities in the business.
how easily a business can cover its immediate, short-term and medium-term debts to ensure that the company does not become insolvent
the profit earned during the year
the value of assets owned by the company
the amount of money invested by shareholders
employees use accounts for
assess weather business is secure to pay salaries
-determaine whether business is likley to expand or be reduced
-find out if profits are rising
banks use account for
-decide wether to lend money to businesses
-assess wether to allow an increase in overdraft
-decide to give or not a loan
creditors use accounts for
Creditors (suppliers)
-assess wether the business is secure and has sufficient cash to pay of debts
-assess wether the business is a good credit risk
-decide whether to press for early payment of outstanding debts
customers use accounts for
-assess wether the business is secure
-determaine wether they will be assures of duture supplies of the goods they are purchasing
-establish whether there will be security of spare parts and service facilities
government uses accounts for
-calculate how much tax is due from the business
-detarmaine wether the business is likley to expand and create more jobs
-Assess if business might close
-confirm that the business is staying within the law in terms of acounting regulations
investors use accounts for
-assess the value of the business and their investment in it
-establish wether the ebusiness is becoming more or less profitable
-determaine what share of the profits investors are receiving
-decide if the business has potential for growth
Potential of buying shares
-decide to consider selling or holding parts
local community uses accounts for
-see if the business is profitable and likley to expand, see if it will be good for local economy
-determaine if the business is making losses and whether this could lead to closure
a account is..
A record of statement of financial expenditure (money out) and receipts (money in) relating to a particular period
statement of profit or loss (income statement)
A statement that records sales revenues and costs of a business to determine the net profit and distribution of profit; also known as the income statement.
how to calculate the table
sales revenue= output x price
cost of sales= direct cost to produce
gross profit= sales revenue- cost of sales
expenses= unit negative
profit before interest and tax= gross profit- expenses= negative value
interest= value
profit before tax=profit before interest- interest
tax=negative value
dividend= money paid to shareholder from the profit after interest tax
retained profit= profit for the period- dividend
balance sheets
show how much a company owns
types of assets ( things you own)
non- current asset- difficult to converts to cash
current assets- easy to convert to cash (stocks, money, inventory, deters)
types of liabilities ( things you owe)
- non current liabilities: loans
- current liabilities- bank overdrafts, trade creditor ( people you own money to)
how to check the balance sheet
net assets must be equal to total equity
