Unit C

Purpose of Accounting :

• Record Transactions
• Management of the Business
• Compliance

Measuring Performance :

• Gross Profit - The amount of profit left after the cost of producing the good or service is deducted from the amount of sales revenue
• Net Profit - The smaller amount of profit made after all expenses are deducted from the gross profit
• Value Owed to the Business - The amount of money owed to the business from sales that have not yet been paid for
• Value Owed by the Business - The amount of money the business owes to others for goods or services purchased but not yet paid for
• Control - Any unusual activity is spotted, helping to prevent fraud

Capital Income :

The money invested by the owners or other investors that is used to set up a business or buy additional equipment.

• Loans - An amount of money lent to the business or business owner(s) from a bank or other financial institution
• Mortgages - Similar to a loan, but tends to be for a larger sum of money and…