B120 an Introduction to Business Studies Tma 3
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- Date Submitted: 03/02/2015 10:09 AM
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Questions 1(a), 1(b), 2(a), 3(a) and 4(a) are all contained in the worksheet below.
2(b) Explain the purpose of a cash account (also called cash flow statement in B120 Book 3) and what an analysis of the cash account can reveal about a business.
The purpose of a cash account (which is also called cash flow statement in B120 Book 3) is to give an accurate account of what the finances of a business are, at a given point in time. The cash account can be produced hourly, daily, weekly or monthly. When it is produced is usually dependant on the size of the business, or how precarious the business finances are. A cash account will show how much money has been paid in to the business account. As well as how much has been paid out by the business, since the last cash account statement was produced.
Some of the important things that can be found out, if an analysis of the cash account was carried out would be.
• How much money the business account actually has, as apposed to what the bank balance statement says the business account has. The reason for this is the cash account takes into account things like. Outstanding cheques that have been given to suppliers, which may not have been processed yet. Also cheques that have not yet been put into the business account
• How much cash is available to the business and if there are likely to be any shortfalls in cash flow. This then enables the business, to make informed decisions as to how these shortfalls can be dealt with.
• It can identify if there is a large surplus of capital. Which then can be used for business investment, or the surplus can be moved to a higher interest paying account.
Word count 259.
3(b) Explain the purpose of a profit and loss statement and what an analysis of the profit and loss statement can reveal about a business.
The purpose of a Profit and Loss (P&L) Statement (which is called the Income Statement in B120 Book 3) is that it gives a financial statement, which takes into...
2(b) Explain the purpose of a cash account (also called cash flow statement in B120 Book 3) and what an analysis of the cash account can reveal about a business.
The purpose of a cash account (which is also called cash flow statement in B120 Book 3) is to give an accurate account of what the finances of a business are, at a given point in time. The cash account can be produced hourly, daily, weekly or monthly. When it is produced is usually dependant on the size of the business, or how precarious the business finances are. A cash account will show how much money has been paid in to the business account. As well as how much has been paid out by the business, since the last cash account statement was produced.
Some of the important things that can be found out, if an analysis of the cash account was carried out would be.
• How much money the business account actually has, as apposed to what the bank balance statement says the business account has. The reason for this is the cash account takes into account things like. Outstanding cheques that have been given to suppliers, which may not have been processed yet. Also cheques that have not yet been put into the business account
• How much cash is available to the business and if there are likely to be any shortfalls in cash flow. This then enables the business, to make informed decisions as to how these shortfalls can be dealt with.
• It can identify if there is a large surplus of capital. Which then can be used for business investment, or the surplus can be moved to a higher interest paying account.
Word count 259.
3(b) Explain the purpose of a profit and loss statement and what an analysis of the profit and loss statement can reveal about a business.
The purpose of a Profit and Loss (P&L) Statement (which is called the Income Statement in B120 Book 3) is that it gives a financial statement, which takes into...