1 Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash. 

2 Operating as a limited liability company is more risky than operating as a sole trader because the shareholders of a business are liable for all the debts of the business whereas the sole trader is only liable for the debts up to the amount he has invested. 

1 Directors of companies have a duty of care to show reasonable competence in their management of the affairs of a company.

2 Directors of companies must act honestly in what they consider to be the best interest of the company.

3 A Director’s main aim should be to create wealth for the shareholders of the company.

1 The directors of a company are ultimately responsible for the preparation of financial statements, even if the majority of the work on them is performed by the finance department. 

2 If financial statements are audited, then the responsibility for those financial statements instead falls on the auditors instead of the directors. 

3 There are generally no laws surrounding the duties of directors in managing the affairs of a company. 

1 Companies should never change the presentation or classification of items in their financial statements, even if there is a significant change in the nature of operations. 

2 Companies should create provisions in times of company growth to be utilised in more difficult times, to smooth profits. 

1 The concept of accruals requires transactions to be reflected in the financial statements once the cash or its equivalent is received or paid. 

2 Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. 

3 Based on faithful representation, it may sometimes be necessary to exclude material information from financial statements due to difficulties establishing an accurate figure.