BUSINESS LEVEL 3 UNIT 5 - P1
Unit 5: Business Accounting
Memo
TO: Chief Executive Office
FROM: SARAH (Finance Manager)
PRIORITY: High
SUBJECT: Purpose of accounting in Pompomi Incorporated
DATE: Monday 18th October 2012
CC:
Financial accounting is the means of measuring of the company’s economic performance. The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities, managerial accounting contrasts with financial accounting in that managerial accounting is for internal decisions making and does not have any rules issued by standard- setting bodies. Financial accounting, on the other hand, is performed according to generally accepted according principles (GAAP) guidelines.
There are two main types of accounting information; financial accounting and management accounting. At the end of each financial statements are prepared to demonstrate the performance and position of the business at that current stage.
Profit and loss account: This is also referred to as the income statement, in which in describes the trading performance of business of the stated period.
Balance sheet: It shows a statement of the assets and liabilities for the business at the end of the stated period.
Cash flow statement: This describes the inflows and outflow of the money for the business during the accounting period.
Notes to the accounts: It displays additional details that have to be disclosed to comply with accounting standards and the companies act.
Directors’ report: It is a description given be the directors of the business who analyse the performance on a whole, during the accounting period.
Financial records are key elements within any business as without this the business would not know whether they were profiting
Memo
TO: Chief Executive Office
FROM: SARAH (Finance Manager)
PRIORITY: High
SUBJECT: Purpose of accounting in Pompomi Incorporated
DATE: Monday 18th October 2012
CC:
Financial accounting is the means of measuring of the company’s economic performance. The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities, managerial accounting contrasts with financial accounting in that managerial accounting is for internal decisions making and does not have any rules issued by standard- setting bodies. Financial accounting, on the other hand, is performed according to generally accepted according principles (GAAP) guidelines.
There are two main types of accounting information; financial accounting and management accounting. At the end of each financial statements are prepared to demonstrate the performance and position of the business at that current stage.
Profit and loss account: This is also referred to as the income statement, in which in describes the trading performance of business of the stated period.
Balance sheet: It shows a statement of the assets and liabilities for the business at the end of the stated period.
Cash flow statement: This describes the inflows and outflow of the money for the business during the accounting period.
Notes to the accounts: It displays additional details that have to be disclosed to comply with accounting standards and the companies act.
Directors’ report: It is a description given be the directors of the business who analyse the performance on a whole, during the accounting period.
Financial records are key elements within any business as without this the business would not know whether they were profiting