ACCA F3 (Chapter 2 Study Guide Solutions

ACCA F3 (Chapter 2 Study Guide Solutions financial reporting - ANSWERis a way of recording, analysing and summarising financial data financial data - ANSWERsales of goods, purchases of goods, payment of goods Sole trader - ANSWERbusiness owned and operated by one person, perhaps employing one or two assistants In law sole trader is not legally separate from business they operate A sole trader must maintain financial records and produce financial accounts. However, there is no legal requirement to make these accounts publicly available; they are usually only used to calculate the tax due to the tax authorities on the profits of the business. Banks and other financiers may request to see the financial accounts of the business when considering applications for loans and overdraft facilities. Financial reporting is only carried out by large quoted companies. ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED FIRST PUBLISH OCTOBER 2024 Page 2/3 Is this statement correct? - ANSWERFinancial reporting is carried out by all businesses, no matter what their size or structure. Limited Liability Company - ANSWERLimited liability status means that the business's debts and the personal debts of the business's owners (shareholders) are legally separate. The shareholders cannot be sued for the debts of the business unless they have given some personal guarantee. This is called limited liability. Partnership - ANSWERThese are arrangements between individuals to carry on business in common with a view to profit. A partnership, however, involves obligations to others, and so a partnership is usually governed by a partnership agreement. Unless it is a limited liability partnership (LLP), partners will be fully liable for debts and liabilities, for example if the partnership is sued.