Question

QUESTION 1

What is the difference between current assets and total assets?

QUESTION 2

Describe a reason why you would use a company (ACN) over an ABN.

QUESTION 3

What are the three core documents within financial accounting?

QUESTION 4

Describe the relationship between revenue and profit, how are they different?

QUESTION 5

How do loans affect a companies leverage ratios?

Answer 1

QUESTION 1

What is the difference between current assets and total assets?

ANSWER

Total Assets would be all the assets which include both current assets and non current or fixed asset available to an entity. Current Assets are part of total assets and represent those assets which shows more liquidity means it can be easly converted into cash. For example, Debtors, Fixed Deposits,account recievable etc.

QUESTION 2

Describe a reason why you would use a company (ACN) over an ABN

ANSWER

The ABN is the unique identifying number for all Australian businesses. Companies which is having an ACN as their identifying number, and if the company carries on a business, it will have an ABN in addition to an ACN. While Australian Business Register registers ABNs, you will need to obtain an ACN through ASIC. So it means it is better to obtain ACN always.

QUESTION 3

What are the three core documents within financial accounting?

ANSWER

Profit and loss account and balance sheet, Income statement, Cashflow statement are considered as the main statements of the company and this will show all the accounting and financial records of the company.  The memorandum of association of a company is an important document for the company. It is mandatorily needed at the time of registration.

QUESTION 4

Describe the relationship between revenue and profit, how are they different?

ANSWER

Revenue is defined as the total income generated by the sale of goods or services of the company. Profit otherwise net profit is the amount of income that remains after accounting for all expenses, debts, operating costs etc. So net profit is the final profit amount after deducting the expenses and cost from the total revenue.

QUESTION 5

How do loans affect a companies leverage ratios?

A leverage ratio is a financial measurements that look at how much capital comes in the form of debt or loans or it can be defined as the assessment of the ability of a company to meet its financial obligations. So if the company take more loans then the debt obligations will increase and it will leads to increased leverage. An increasing in leverage is not good for the business.

ThankYou.....