Flashcards in Purpose Of Accounting Deck (7)
Loading flashcards...
0
Why do we keep accounting records?
To see whether the business has made a profit.
1
How do we assess whether a business is profitable?
Produce an income statement.
2
How does a business know if it's solvent or not?
By producing a statement of financial position.
3
How are stakeholders informed about the progress of the business?
By looking at the businesses income statements and statements of financial position.
4
What can the owner produce in order to anticipate the future of the business?
Cash budget
Projected income statement
Projected statement of financial position
5
How do owners know when to take corrective action?
By comparing accounting records with what was forecast.
6
