3.4 Final Accounts

Drag & Drop - Financial Statements

SL Learning Outcomes

Profit and loss accounts

Balance Sheets

Intangible assets

Importance to stakeholders

3.4 Intro to Balance Sheet

Purpose of Final Accounts

Proper accounting

Better financial planning and control, legal requirementAccount for all monies (payments and receipts) in firm - whether it belongs to owners, lenders or investors

Statements in set of final accounts:

Profit and loss account - trading position of business at the end of a specified accounting periodBalance sheet - assets and liabilities of business at specific point of timeCash flow statement - sources of cash inflows of business and where spent

Legal requirement

to be audited by independent and chartered accountants to certify accounts but there is no uniform method to present them
Financial accounting - public and disclosed accounts

Ensure transparency of funds

Stakeholders have different demands of firm - adds pressure to ensure final accounts are impressive

Stakeholders & Financial Statements

Shareholder

· Where is the money spent · How well is the performance of investment · Financial performance determines to hold, sell or buy more shares

Employees

· Assess job security · Likelihood of pay increments

Managers

· Judge operational efficiency · Financial analysis - target setting, strategic planning

Competitors

· Comparisons of financial performance

Government

· Ensure business pays the correct amount of tax (esp. multinational companies)

Financiers (banks, angels)

· Scrutinize accounts before approving any financial backing

Suppliers

· Scrutinize accounts - what credit terms should they be offered?

Potential Investors

· Assess whether investment is financially worth while

3.4 review

https://slideplayer.com/slide/9340039/

https://www.slideshare.net/blackwell3/b-m-unit-3

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