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Who is more interested in final accounts? internal or external stakeholders?
Both, internal or external stakeholders are interested in final accounts
List 2 external stakeholders that are interested in final accounts
Only two:
Government
The registrar of companies
Competitors
Financiers/Creditors
Supplier
Media
What is an intangible asset?
Is a non-physical asset that has a lifespan of more than a year.
This asset has a monetary value and lasts for more than a year but cannot be 'touched'. Examples include patents and copyrights.
What is another name for the profit and loss account
income statement
What does the balance sheet shows?
The balance sheet essentially shows how the company has used its resources, comprising its liabilities (or borrowed funds) and equity, and the financial position of a company.
What is a patent? And for how is it used?
A patent is Legal protection giving the inventor of a product the exclusive right to produce and sell the product.
A patent is used to protect the inventor from others using his/her invention to produce goods for sale.
What purpose does final accounts have for shareholders and owners?
Shareholders and owners know the effectiveness of money invested
Why is the objectivity important for an accountant in a conflict of interest?
Conflict of interest results in the accountant being subjective in his/her judgement as he/she would prioritise personal interests.
What is the main purpose of profits and loss account?
Company uses profits and loss accounts to calculate the net profit or loss for a given period.
How is working capital calculated?
Current assets – current liabilities
Is important the spending a business has for environmental and social aspects? YES OR NO
YES
In which way does the final accounts serve the registrar of companies?
Final accounts ensure that the business is conducting its financial affairs with honesty and integrity and therefore safeguards the interests of all the stakeholders
Define integrity
Integrity refers to honesty while professional competence
How is it called the last section of the profit and lost account?
The appropriation account is the last section of the profit and loss account. It shows how the profit, after the interest and taxes are paid, is divided between shareholders (in the form of dividends) and whatever is left is retained by the business.
When the selling price of the company is higher than the value of its net assets what is reflected from the company?
The goodwill of a company is reflected
What is the accountants role in a business?
Accountants have the role in a business of organizing accounts and preparing the final accounts
Explain why a community would be interested in the final accounts of a business
They would be interested in:
1. Assessing the job security of working in a company
2. Evaluating possibilities of employment
3. Analyzing how a company invests and where it invests (environmental or social investment)
Explain what is ethics and its importance in a business
Ethics are the moral values such as the sense of right and wrong and their role is to guide business decision-making.
Name a way the retained profit is used
The retained profit can be used in various ways, such as to expand the business, or invested in savings or mutual funds to generate interest income for the company.
What are the 5 types of intangible assets? (list 3)
Patents
Copyrights
Brand
Registered trademark
Goodwill
Hos does ethics affect accounting?
It influences the spending a business has for environmental and social aspects without the consideration of their stake in the business.
Which stakeholder is interested in final accounts to determine the tax payable by the firm, as well as employment prospects?
The external stakeholder - Government
Disclosing the profits to a third party (a friend) brokes which accounting standard?
Confidentiality
How does a trading account calculate the gross property?
The trading account calculates the gross profit by subtracting the cost of goods sold from the sales revenue.
What is the difference between Owners's equity, assets and liabilities?
Owner's equity represents the net or final value of the company, which is the difference between all the items of value (assets) that the company owns and all that the company owes (liabilities).