1. Accounting: A way of recording, analysing and summarising
transactions of an entity.
2. Statement of Profit and Loss: It reflects the performance of a business
over a period of time.
3. Statement of Financial Position: It reflects the position of a business at
a point in time.
4. Users of Accounting: Any organisation/business/individual who needs
to keep track of their income, expenses, assets and liabilities.
5. Types of Business Entity: • Sole trader
•Partnership
•Limited Liability Companies
6. SOFP: A list of assets and liabilities of the business.
7. SPL: The revenue and expense of a business for the accounting period
8. Purpose of SOFP: To show the total value of the net assets of the
business at the end of a period.
9. Purpose of SPL: To show the amount of profit and loss that the
business has made during that period.
1/
,10.Stakeholders for financial information: • Managers/Directors
•Owners of the company
• Trade contracts
•Finance providers
• HMRC
11.Capital Expenditure: Expenditure which results in the acquisition of
non-cur- rent assets or an improvement or enhancement of their
earning capacity (>1yr) (NCA)
12.Revenue Expenditure: Expenditure which is incurred either for trade
purposes (e.g. items for resale) or to maintain the existing earning
capacity of non-current assets (e.g repairing)
13.Code of Ethics (IFAC): • Professional Behaviour
•Objectivity
•Professional Competence & due care
•Confidentiality
•Integrity
14.Business entity concept: A business is a separate entity from its
owner.
15.Capital: How much the business owes back to the owner.
2/
, 16.Year-end capital Equation: Bal. at start of year + net profit +
capital inj. - drawings
17.Share capital Equation: Bal. at start of year + Further investment in
shares by new stakeholders
3/
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