AQA Business Studies/Uses and Limitations of Accounts

From Wikibooks, open books for an open world
Jump to: navigation, search

There are two types of business accounts:

  • Financial Accounts
    • Balance Sheet
    • Trading, Profit and Loss account
  • Management Accounts
    • Cash flow statement

Financial accounts are open to be window dressed (manipulated) to make them look better before they are published. Company Act 1985 made it compulsory for Ltd and Plc companies to publish these accounts. Unlimited firms don't actually have to.

Management Accounts are for internal use in decision making. It isn't beneficial to window dress these accounts because they are usually used to make decisions by the management. They could also be drawn up for each profit/loss centre in order to make better decisions