*It’s more costly both in terms of time and money to trade as a limited company. First up, you have to pay to form your limited company. If you do it yourself, it can be as low as £20, but if you get someone to do it on your behalf, it can be as much more. [read more]
What is a Limited Company*A limited company is a separate legal identity from its directors, shareholders and employees. Therefore, a limited company has its own assets, liabilities which are separate from it’s owners. This is obviously a significant difference from the situation of a sole trader or partnership, where the firm’s assets and liabilities are that of it’s owners. This legal [read more] |
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The Consistency Concept*Accounting is not an exact science. There are certain procedures and principles that are recognised as good practice, but within these limits, there are often various acceptable methods of accounting for similar items. To make things comparable, the consistency concept just means that you treat similar items in a similar way and that the same [read more] |
The Materiality Concept*Since accounts preparation is not an exact science, the pursuit of excessive detail is not warranted when it would not affect anyone’s understanding of the accounts. Detemining whether or not an item is material is a very subject exercies. There is no absolute measure of materiality. Generally, an amount less than 5% of net profit [read more] |
The Going Concern Concept*This concept simply implies that the business will continue to operate for the foreseeable future and that it isn’t suddenly going to cease trading. The significance of this concept is that the assets of the business are not valued at their “break-up” value, which is the amount that they would sell for if they were [read more] |
The Accruals Concept (The Matching Concept)*This concept is to ensure that, in calculating profit, the expenditure incurred in earning it must be matched to it. For example, if a business bought 20 buckets but only sold 18 of them, it would be wrong to charge the profit and loss account with the cost of all 20 buckets, as there are [read more] |
