Final Accounts
Keep a Personal Checklist:
What are the two sets of final accounts that all companies are obliged to report to their shareholders?
Outline how four different stakeholder groups might make use of financial accounts.
What are the main principles of accounting practice?
Why is there a need for accounting practice to be ethical?
What is the purpose of a profit and loss account?
What is a balance sheet and why is it said to be a static financial document?
What are intangible assets?
HL Extension
Why do firms depreciate the value of their fixed assets?
Distinguish between the reducing balance and the straight line methods of depreciation.
What are the limitations of the final accounts?
In finance you may find different terminology that mean the same.
In some of the videos you will find:
Income Statement = Profit & Loss Statement
Revenue = Sales Revenue = Turnover
Cost of Revenue = Cost of Goods Sold
Operating Income = EBIT (earnings before interest & tax) = Net profit before interest & taxes
Net Income = Net profit after interest & taxes
Retained earnings = Retained profits
Accounts receivable = Debtors
Accounts Payable = Creditors
HL Extension
EXAM TIPS
- Know both statements well, and know each category (use the Interactive practice below to test your knowledge)
- To check if your balance sheet is correct, make sure that:
Assets = Liabilities + Equity
- Make sure to differentiate between 'Capital Employed' and 'Working Capital'
