1. Explain the similarities between non-current assets and current assets? (3 marks) Similarities:
Acquired by a business to gain profit or chances of investment Both current and non-current assets are recorded on the balance sheet Differences
Current assets are intended for consumption of sale realised during a year Current assets is used for trading or transactions
Current assest have direct results of the profit gained in the business such as bank balance Non-current assets are used for a longer duration (12 months) Non-current assets used for productive investment purposes
Has very low impact of the profit gained as it only deals with things like machinery 6. the accumulated profit is also known as the retained earnings, retained profit and unappropriated profit. what is the accumulated profit and why do accountants and bookkeepers use different names for the same thing? (6 marks)
Accumulated profits is profits that are not paid as dividend but is transfered over to the accounts for the next year. Also can be used to reinvest in the core of the business to help pay off debts or to purchase a capital asset. The reasons why accountants and bookkeepers use different names for the same thing is because bookkeepers are the people who record the financial transactions in a business in the form, of journals otherwise known as books, these transactions include receipts, slaes and payments made by the organisation. Bookkeepers are not certified accountants so they will use the term retained profits as this can easily mean profits you have retained over a period of time whereas an accountant is someone who keeps, audit and financial records of a individual or a business and prepares financial and tax reports who is qualified and specialises in this fields will understand this and will call it accumulated profits as its profits that is accumulated and used to help the business. Accumulated Earnings and Profits Definition |...
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