Accounting records and accounts
Earlier on we distinguished between accounting records on the one hand, and accounts (or financial statements) on the other. You may be wondering about the importance of this distinction.
Suppose you help your sister with her market stall business on a Saturday. She keeps a little notebook in which she jots down each transaction as it takes place. She buys her stock from four different suppliers as follows, and pays in cash as noted below:
Supplier A £100 Supplier B £250 Supplier C £50 Supplier D £175
On Saturday she sells all her goods to ten different customers, noting down the following amounts received in cash: £10, £75, £80, £65, £90, £115, £20, £25, £70, £45, £100.