Rohana is thinking of starting a business. She wants to make sure that she understands the financial implications of her enterprise, so has consulted an accountant, and asks the following questions:

1 How will I know if the company has made a profit?

2 What key accounting rules and regulations have to be considered?

3 What is the main objective of providing financial statements?

What answers is the accountant likely to give to Rohana?

1.8# Nickleby has summarised its key financial information for the past year, as follows:

£
Total sales made in the year 840,000 Total cash received in the year from customers 735,000 Total costs, including goods for resale 240,000 Total cash paid for costs, including goods for resale 255,000 20 ACCOUNTING AND FINANCE FOR BUSINESS

(a) What was the total profit which Nickleby made during the year?

(b) How can the ‘total cash paid in the year for costs, including goods bought for resale’ be greater than the ‘total costs, including goods bought for resale’?