Prework Bookkeeping Flashcards

1
Q

What questions do accounts answer?

A
  1. Is the business making a profit?
  2. Has it got enough funds to pay its debts?
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2
Q

What are the 2 principle statements accounts are based on?

A
  1. statement of financial position
  2. statement of profit or loss
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3
Q

what is the statement of financial position?

A

a statement of the financial position of a business at a given date

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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

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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
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6
Q

what is bookkeeping?

A

recording of business’s commercial transactions.

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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

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