Accounting and Finance Key Terms: Assets: the resources a business owns - Fixed Assets – those lasting more than one year and not used up in production – equipment, machinery, buildings, etc. Freehold assets – where the business has full ownership of the assets Leasehold assets – agreement permitting the leaseholder the right to use the asset for a fixed period in exchange for a regular payment Goodwill – the difference between the audited value and the market value of a business – the image, brand name, the existence of patents or trademarks, etc. Current Assets – assets used up during production and which will realise cash within a year – debtors, raw materials, stock, etc. Liabilities: The financial obligations of a business – what a business owes Loans, shareholders funds, creditors, tax liability, interest owing Current liabilities – those obligations the business has to meet within a year The Purpose of Accounts: To provide information for stakeholders Shareholders – progress of their investment Government – tax liability Suppliers – credit worthiness Customers – long term future of the business Prospective Investors – decision making Potential bidders in acquisition activity Trade Unions – negotiations with the company Management – monitor performance of the business Employees – their position in the business (they may well also be shareholders!) Types of Information: Profit and Loss Account – the revenue and costs of a business over a time period Balance Sheet – the assets and liabilities of a business at a specific point in time Use these sources to give ratios – the relationship between different aspects of the business
Posted on: Mon, 01 Jul 2013 06:05:05 +0000
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