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3.5 Final accounts - notes


In the previous sections we looked at sources of finance and their suitability, used different methods of investment appraisal, defined working capital and prepared cash flow forecasts and explained the importance of budgets and calculated variances. We now move on to look at final accounts, methods of depreciation, intangible assets and stock valuation.

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By the end of this section you should be able to:

  • Explain the purpose of accounts
  • Construct and amend accounts from information given
  • Evaluate the importance of final accounts to each stakeholder group

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  • Calculate depreciation using straight line and reducing balance methods
  • Evaluate the strengths and weaknesses of each method
  • Explain the meaning and value to the firm of differ types of intangible assets
  • Understand the difficulties associated with valuing intangible assets
  • Make calculations of closing stock using LIFO and FIFO
  • Calculate the effect of different stock valuations on profit