... Excise (VAT). The larger the business, the stricter the rules on what accounts it has to prepare. Most business have to prepare a: * Trading and Profit and loss account * Balance sheet * Directors' report (describing the previous year's activities) Limited companies also have to publish an annual report and final accounts because they have a separate legal identity. These accounts have to be checked by an independent person - an auditor - to ensure that they give a 'true and fair view' of what has happened to the business during the previous year. Potential investors or shareholders, for example, will want to know if a business is worth investing in. Potential creditors will also want to know whether the company will be able to repay any loans or credit they give them. These assessments are based on two key accounting concepts: liquidity and profitability. Remember Make sure you understand why accounting ...

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