Prework Bookkeeping

Question 1

What questions do accounts answer?

Answer 1

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

Question 2

What are the 2 principle statements accounts are based on?

Answer 2

1. statement of financial position
2. statement of profit or loss

Question 3

what is the statement of financial position?

Answer 3

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

Question 4

What is the statement of profit or loss?

Answer 4

a summary of the results of a business’s transactions for a period ending on the date of the statement of financial position

Question 5

what types of businesses will produce a statement of financial position and statement of profit or loss? How often?

Answer 5

• 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

Question 6

what is bookkeeping?

Answer 6

recording of business’s commercial transactions.

Question 7

what is the purpose of bookkeeping?

Answer 7

enables transactions to be summarised at the end of the period so accounts can be produced