Compare the final accounts of two organisations explaining the similarities and differences.
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M1 Compare the final accounts of two organisations explaining the similarities and differences Similarities and differences between the sole trader and the limited accounts Both of the companies have the same structured profit and loss account but they are still different. If we have a look at the profit and loss account we will see that they both have sales, opening stock, and purchases, less return until it is reached by the overheads. This also shows that they also have different currencies, the subway Groningen deals with the Euros and the subway LLC deals with American dollars but in millions as subway Groningen dealing only with thousands. Not forgetting that the subway in Groningen is a franchising company and the subway in America is LLC. Groningen subway only does it profit and loss account for its own company and the subway in America is for the whole subways that are franchised. What is also different is that the profit and loss account from the subway LLC is that they have a share of profits; this means that this company has shareholders which are them. Profits are usually distributed to shareholders in the form of a dividend some profits may be retain by the business as working capital which will be seen in the balance sheet.
A balance sheet is also a final account a business should provide. A balance sheet is like the picture of what a business owns, owed and is owed at a specific time. They are drawn up on a specific dates, normally the last day of a business financial year and the contents of the balance sheet are a picture of the firms situation on that date. On the balance sheet we see the building the business owns, the equipment it uses, the stock it holds, we show how much money the business is owed and how much money the business owes. We also see where the money is come from to buy all their assets of the business. A sole trader do not have to prepare a balance sheet either but it is good for them to see what is being owed, owes and it has been financial but a partnership company should make one so it can be submitted to the Companies House and shareholders. All business should prepare full sets of accounts. Here are numbers of reason why this should be done: * Legal requirements- this applies to all limited companies. The form and timing of presentation of accounts, laid down by law and by the accounting bodies * Tax requirements- if a business turnover is more than 15000 then a full set of accounts can be requested by the Inland Revenue.
helps in calculating the net profit of the business Accounting cost concept This states that all assets are recorded in the books of accounts at their purchase price, which include cost of acquisition, transportation or even installation. It means that fixed costs like buildings, plan and machinery, furniture, etc are recorded into the books of accounts. It may be clarified that cost means original or acquisition cost only for new assets and for the used once, cost means original cost less depreciation. The cost concept is also known as historical cost concept. The effect of cost concepts is that if the business entity does not pay anything for acquiring an asset this item would not appear in the books of accounts. So, good will appears in the accounts only if the entity has purchased this intangible asset for a price. To the cost concept: * Required assets to be shown at the price it has been acquired, which can be verified from the supporting documents. * It helps in calculating depreciation of fixed assets * The effect of cost concept is that if the business entity does not pay anything from an asset, this item will not be shown in the books of accounts. Leticia Grinuva IBS 3 Unit 1 Exploring business activity M2 Dhr Huizinga Leticia Grinuva IBS 3 Unit 1 M2 Dhr Huizinga
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