Key Knowledge 3

Question 1

Bank Fees

Answer 1

important to carefully examine the disclosure statement when opening an account as banks may impose hidden fees which can add to business expenses.

Question 2

Interest Rate

Answer 2

as they will determine how much returns the business will earn on its deposits and how much it will have to pay back on any loans.

Question 3

What is Budgeting and what are the benefits?

Answer 3

involves predicting or estimating a business’s financial performance for a given period in the future. Benefit: helps a business ask questions why certain targets were not reached, allows a business to set standards and use them as a benchmark.

Question 4

What is Auditing and what are the benefits

Answer 4

the process of testing and evaluating a business’s accounting processes and internal controls. Benefit: ensure the accuracy of a business’s financial statement which boosts trust with investors, identify areas of financial weakness which helps manage risks and fraud.

Question 5

What are source documents?

Answer 5

Original paper documents recording a business’s financial transactions.

They serve as physical evidence that a transaction occurred and provide basic data for financial reports.