Business Accounting P1,P2

1758 Words Oct 22nd, 2012 8 Pages
P1

Why is it important to keep accurate financial records?

Financial records tell you how much income your business is generating and how it’s being spent on things like overheads and products etc. You can then create a profit and loss balance sheet, this is important so that your financial advisor can then tell you what is going good or what is going bad and from that he can direct you on what to do. If a business doesn’t keep it right with the bill then they cou8ld end up in trouble with the HM Revenue and customs (HMRC). If the business doesn’t record the cash transactions correctly then it cannot report its financial bills. The sales records will be updated regularly; this should give you a good idea on how the business is doing
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Revenue expenditure

Revenue expenditure is when a business has to spend money on the day to day essentials concerning expenses. There is a long list of things that need to be sorted, things like;

Premises costs

This can range from renting a market stall to renting factories, the expenditure falls into two categories rent and rate. Rent is when the business doesn’t own the premises and has to pay a regular sum of money for the use of it. Rates are by the local council and it is an annual charge that can be paid over ten months by direct debit or a one off payment. It is a non-domestic rate and it goes towards services such as street lights and refuse collection. The amount of money owed is calculated by the size, location and nature of the business.

Heating and lighting – these are often quarterly bills and they cover services such as gas and electricity
Insurance - A business has to take out a few different insurance deals to ensure that they are cover if anything where to go wrong. This includes building insurance which covers the property from things like fire damage. Contents insurance which basically covers everything that is inside the premises such as equipment and stock from things like flooding. Public liability insurance, this is to cover all the staff etc in the event of an accident.
Administrative costs

Administrative costs are things like stationary and postage, stationary and telephone charges;

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