IB Business Management SL 3.4.1 Purpose of accounts Question Bank

Alejandra’s opening balance in a cash-flow forecast is the cash available at the start of a period; the closing balance is the opening balance plus net cash flow for that period, and the closing balance becomes the next period’s opening balance. As music income grew from copyrights and royalties, Alejandra needed an accountant to prepare final accounts, manage money and pay taxes. Final accounts such as a profit and loss account and balance sheet help owners, managers, shareholders and tax authorities assess performance, financial position, assets, liabilities, profit and obligations. LadyA’s product life cycle began with the 1994 film and first CD, grew through successful albums and a number-one hit, reached maturity and peak popularity by 2000–2001, then faced decline as CD sales fell because of file sharing, MP3 players, smartphones and the economic downturn. Endorsements, social media, perfume and cosmetics and rebranding could extend the life cycle and create new revenue streams.

"Alejandra needed an accountant to help her prepare her final accounts". Explain the importance of final accounts to two different LadyA stakeholders.