Prework Bookkeeping Flashcards
1
Q
What questions do accounts answer?
A
- Is the business making a profit?
- Has it got enough funds to pay its debts?
2
Q
What are the 2 principle statements accounts are based on?
A
- statement of financial position
- statement of profit or loss
3
Q
what is the statement of financial position?
A
a statement of the financial position of a business at a given date
4
Q
What is the statement of profit or loss?
A
a summary of the results of a business’s transactions for a period ending on the date of the statement of financial position
5
Q
what types of businesses will produce a statement of financial position and statement of profit or loss? How often?
A
- sole traders
- partnerships ( produce special partnership accounts)
- companies (must produce financial statements and these are regulated by company law and accounting standards)
Will produce them periodically usually annually
6
Q
what is bookkeeping?
A
recording of business’s commercial transactions.
7
Q
what is the purpose of bookkeeping?
A
enables transactions to be summarised at the end of the period so accounts can be produced