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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.

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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.