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Title: Principles of Financial Accounting
Description: Explains the basics of a profit and loss sheet, cash-flow and types of organisations pros/cons.
Description: Explains the basics of a profit and loss sheet, cash-flow and types of organisations pros/cons.
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Principles of financial accounting
Definition: Accounting is identifying, measuring and recording, processing and
communicating economic information to the users
...
Qualities of accounting
-‐ Relevance – influencing users decisions
(Materiality – an item of information which is significant)
-‐ Faithful representation – free from error, the way of estimation so it
shows a true portrait
...
-‐ An understanding – should be set out clearly and concisely as possible
...
2) Profit and loss statement – profit and loss captures the transactions “FOR
THE YEAR”
3) Cash flow statement – capturing a cashflow for a certain amount of
period, “FOR THE YEAR”, it shows where money went and where did it
come from
...
Forms of business organisations
1) Sole proprietorship – the only owner / has unlimited liability
2) Partnership – two or more / no formal procedures / usually have a
unlimited liability
...
4) Non – profit making organisations – don’t have to prepare profit or loss
statements – instead income and expenditure account
...
Title: Principles of Financial Accounting
Description: Explains the basics of a profit and loss sheet, cash-flow and types of organisations pros/cons.
Description: Explains the basics of a profit and loss sheet, cash-flow and types of organisations pros/cons.