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Introduction to Accounting, Ass. 1

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Assignment One, Introduction to Accounts




Business & Leisure


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Mr. B Partton

Bob’s Builders Ltd

Manor industrial park


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Ms. T Keey

Tina’s Hair Salon

54 The High Street


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Dear Mr. Partton

R.e. Why use accounts?

Accounts are statements that give you the financial information about your business i.e. what money comes and goes out of your business (inflow & outflow). They show, mostly in table’s laid out for the financial year, things like revenue, the costs and the profit and/or loss of the business. They also can show the debts, capital and the assets you have for/in your business.

Most businesses use accounts; the main types of accounts used are:

Balance Sheets, they give information about the company’s funds and how they are used in the business. It lists the assets, capital and the liabilities and the wealth of the business; basically, its shows the financial position of the company.

Profit & Loss, they show a basic summary of the years trading activities for a year; stating revenue from sales, business costs and the overall profit and/or loss and how it is used.

Cash Flow Statement, They show the cash inflow and outflow,

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