Assignment One, Introduction to Accounts
P1,
L.Barker
BCOT
Business & Leisure
Basingstoke
RG21 6YG
Mr. B Partton
Bob Builders Ltd
Manor industrial park
Basingstoke
RG22 9IU
Cc:
Ms. T Keey
Tina Hair Salon
54 The High Street
Basingstoke
RG22 5KJ
08.11.2007
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 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 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, the money that goes in to
and out of the business each month.
Balance Sheet Profit & Loss account Cash Flow Statement
Businesses need to produce accounts as sometimes or most of the time they are legally
obliged. Sole traders (business owed by 1 person) and larger companies need to do this to