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Company Accounts
Two key financial documents kept by firms are:
1. The Balance sheet ­ a document describing the financial position of a
company at a particular point in time, by comparing the assets a
organisation my have with the amounts that it owes (its liabilities)

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Non-current assets are purchased to allow the business to operate
continuously. Land and buildings are acquired so that the firm has the
premises in which to operate.

Current assets ­ Short term items that circulate in a business on a daily
basis can be expected to be…

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Capital expenditure, Revenue expenditure and depreciation.

Classifying business expenditure
Business expenditure can be classified as either revenue expenditure or
capital expenditure.

Capital expenditure exists when the spending is on an Item that will be
used frequently. In accounting terms if the expenditure on an asset
helps the…

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In the income statement, depreciation spreads the cost of an asset
over the lifetime during which it is helping to create income.

In the balance sheet, depreciation shows the reduction in an asset's
value over its lifetime.

Working capital

What is working capital?
The formula for calculating…

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The efficiency of supplier. If supplier can supply large quantities at
short notice, a business will be able to hold lower inventory levels.

Lead time. If it takes a long time to make a product, companies will be
more likely to hold them in stock.

Customer expectations.…

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This is a 6 page set of notes which deals effectively with the balance sheet - its composition and uses.

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