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Summary P2 UNIT 6
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Summary of 5 pages for the course Unit 6 - Financial Accounting at PEARSON (P2 UNIT 6)
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Unit 6P2
Courtney Lowes
Companies will have to adhere to certain policies and rules as follows
Statements of Standard Accounting Practice:
This is rules which are set for a business when they are publishing their financial reports, by following
the rules which are given it helps to keep statements in the correct format which makes it easier to
compare businesses performance as they are following the same practice and will be more organised
and clear to understand. M&S would have to follow these standards and the set rules as it would make
their statements more reliable.
Financial Reporting Standards:
This is a global language which is set for all business accounts so they can all be understood easily and
compared with companies from different countries without being misleading or inaccurate. They should
represent the businesses financial positions and their overall performance. M&S would have to follow
these standards and the set rules as it would make their statements more reliable.
International Accounting Standards:
These rules would have been issued by the board of accounting standards and they will ensure that the
accounting done by businesses is in the right standard so that it is easily comparable and will be more
accurate. M&S would have to follow these standards and the set rules as it would make their statements
more reliable.
International Financial Reporting Standards:
This is the accounting standards that have set and created by the International Accounting Standards
Board. These standards are global and anyone providing public financial documents would have to
follow them as it helps to keep the information reliable, comparable and stops it from being misleading
to the businesses stakeholders. M&S would have to follow these standards and the set rules as it would
make their statements more reliable.
Profit and Loss Account:
A profit and loss account is an account which shows the incomes and outgoings or a business over a set
period of time, as well as the net profit and loss. The account will show how the business is doing and
their current position is financially. M&S would have to follow these standards and the set rules as it
would make their statements more reliable.
Balance Sheet:
This is one of the financial statements that a business will need to make and it shows the assets, capital
and the liabilities that a business has at a set time. This statement shows the value of the business
overall and their finance.
Cash Flow Statement:
The cash flow statement shows how the changes which are shown in the balance sheet can affect their
cash and assets. It breaks down the analysis of the finance to try and help organise the businesses
finances better.
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