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Final accounts 3.4 (How stakeholders use business accounts (Managers
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Final accounts 3.4
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Principles and ethics
Integrity: Being honest, truthful and straightforward about all business practice. Accountants should have no association with info that is believed to be false of misleading.
Objectivity: Shouldn't allow bias, conflict of interest or the influence of other people to override their professional judgement.
Confidentiality: Accountants shouldn't disclose personal info unless there is specific permission or legal duty
Professional competence: No one should undertake professional work which they're not competent to preform. Should also constantly update level of professional knowledge and skills.
Professional behaviour: Even if there is no obligation to act in a certain way, accountants should not act in a way that will disrepute their professional body.
Intangible assets
Marketing-related: Trademarks, logos or trade-names are words or symbols that distinguish the company. These can be renewed for a period of 10 yrs.
Customer-related: Result from business relations with outside parties. Include a lost of regular customers and contracts from long-term customer relations.
Artistic-related: Gove ownership rights to plays, literary works, musical works and photos, pictures etc. A copyright can be granted for the life of the producer + 70 yrs.
Technology-related: From patents taken out on innovations or tech advances. It gives its holder the exclusive right to use, manufacture and sell a product or process for 20 yrs.
Contract-related: Value of rights from contractual agreements = franchises, construction permits, broadcasting rights, licensing agreements etc.
Goodwill: When the business is valued at or sold at a higher value than the balance sheet value of assets. e.g. a company buys another company for more than it is worth
They are difficult to put a value on as they're bought and sold on the open market also, their value can fluctuate wildly. These assets do not have any physical substance and aren't financial instruments.
Main acc + features
Profit and loss: Shows how gross profit/loss has been made form the trading activities of the business.
Use: Many different for different stakeholders.
Balance sheet: Records the net wealth of a business. In a company the 'net wealth' belongs to shareholders.
- Working capital/ net current assets = current assets - current liabilities
- Curren assets = Stocks, debtors and cash balance
- Current liabilities = Overdraft, unpaid dividends, unpaid tax
- Fixed assets = Land, buildings, vehicles and machinery - tangible assets
- Sharholders equity = The capital invested int he business by the shareholders originally or retained profits in the business. the equity will not be repaud to shareholders unlike loans.
- Long-term liabilities = Long term loans owned to a business. Paid over a year. Loand, mortgages, debentures.