Financial aspects of business an overiew Assignment

Financial aspects of business an overiew - Assignment Example For sale traders, the liability is unlimited and the personal assets can be used to repay the liabilities of the business. It is important for sole traders to maintain their accounts in order to have an idea about the performance of the business. It would enable the owner to have an idea about the present debt condition of the business. It would also enable in keeping a track on the total sales and purchases of the goods and services. It is essential to keep and maintain accounts because it helps in maintenance of transparency of the business transactions. It also reduces the existence of flaws in any decision making by the trader. Partnership business is conducting business activities together by two or more partners and earning and sharing the profit earned from the business operations. In case of partnership business, the company needs to maintain its book of accounts in order to have a clear and transparent disclosure of all the business activities to all the business partners. I t would also enable assessment of profitability of the company followed by its division among all the business partners. It is very important to keep a track on all the financial transactions of the partnership business in order to maintain its stability. ... There are a large number of complex financial transactions taking place every day. It is very essential to keep a track on each and every transaction taking place (Glynn ?and Murphy 22). Thus, the significance of maintaining accounts by a company is very high. It would display the exact financial position of the company in the market and disclose the profit or loss incurred by it. It would also help in keeping a track on the total assets and liabilities of the company. Question 2 a.1) Trading Account Trading Account Debit Credit Particulars Amount (in ?) Particulars Amount (in ?) To opening stock 2000 By Sales 95414 To Purchases 57580 By Closing Stock 2745 To Wages 11438       To Gross Profit 27141       Total 98159 Total 98159 a.2) Profit and Loss Account Profit and Loss Account Debit Credit Particulars Amount (in ?) Particulars Amount (in ?) To rent 2650 By Gross Profit 27141 To heat and light 3698       To sundry expenses 950       To Net Profit 19843       Tot al 27141 Total 27141 b) Balance Sheet as on 31st December 2012 Balance Sheet Liabilities Amount (in ?) Assets Amount (in ?) Capital 24770 Fixed Assets    (+)Net Profit 19843 Premises 35000 (-)Drawings 2000 Oven and Equipment 9560    42613 Delivery Van 9580 Long term Debt 20440    54140 Current Liabilities    Current assets    Creditors 2000 Debtors 3098       Bank 620       Cash 4450       Closing Stock 2745          10913 Total 65053 Total 65053 c) Importance of double entry book keeping Double entry book keeping suggests that there should be double entry for each and every transaction into the books of accounts (Miner 21). This method of book keeping helps in dealing in a special way with the opening as well as closing balances at