What is the primary purpose of the final accounts?
Practice Questions
Q1
What is the primary purpose of the final accounts?
To record daily transactions
To provide a summary of financial performance
To prepare tax returns
To manage cash flow
Questions & Step-by-Step Solutions
What is the primary purpose of the final accounts?
Step 1: Understand that final accounts are financial statements prepared at the end of a specific period, like a year.
Step 2: Recognize that these accounts include important documents like the income statement and balance sheet.
Step 3: Know that the income statement shows how much money the business made and spent during that period.
Step 4: Learn that the balance sheet shows what the business owns (assets) and what it owes (liabilities) at the end of that period.
Step 5: Conclude that the primary purpose of final accounts is to summarize the financial performance (profit or loss) and position (assets and liabilities) of the business.
