FINAL ACCOUNTS Trading Account shows Gross Profit and
- Slides: 9
FINAL ACCOUNTS Trading Account – shows Gross Profit and Loss Account – shows Net Profit Balance Sheet – shows what the business owns and owes and how it has been financed.
TRADING ACCOUNT Gross Profit = Sales – Cost of Sales £ £ Sales £ 27, 500 -Returns in 1, 000 26, 500 -Cost of Sales Opening Stock +Purchases - Returns out 9, 000 15, 000 500 14, 500 23, 500 - Closing Stock Cost of Sales GROSS PROFIT 3, 750 19, 750 6, 750
PROFIT AND LOSS ACCOUNT Net Profit = Gross Profit - Expenses £ £ Gross Profit 6, 750 + Rent received 2, 000 8, 750 -Electricity -Stationery -Rates -Interest on loan -Advertising 510 125 756 159 -Sundry Expenses 845 545 124 -Telephone 400 -Insurance NET PROFIT 3, 464 5, 286
BALANCE SHEET FIXED ASSETS Premises 80, 000 Machinery 13, 200 Motor Van LONG TERM LIABILITIES 8, 700 101, 900 CURRENT ASSETS Capital 80, 000 + Net Profit Cash in hand 970 5, 286 Cash at bank 10, 050 85, 286 Stock 3, 750 Debtors 1, 750 - Drawings 16, 520 Bank Loan CURRRENT LIABILITIES Creditors Working Capital Mortgage 9, 000 14, 866 70, 420 9, 000 30, 000 7, 520 109, 420
BALANCE SHEET FIXED ASSETS Premises Machinery Motor Van CURRENT ASSETS Cash in hand Cash at bank Stock Debtors CURRRENT LIABILITIES Creditors Working Capital 80, 000 13, 200 8, 700 970 10, 050 3, 750 101, 900 16, 520 9, 000 7, 520 109, 420 LONG TERM LIABILITIES Capital + Net Profit - Drawings Bank Loan Mortgage 80, 000 5, 286 85, 286 14, 866 70, 420 9, 000 30, 000 109, 420
BREAK EVEN ANALYSIS Break even is the point where: l l l Total costs = total income from sales No profit has been made No loss has been incurred Sales above this point lead to a profit Sales below this point lead to a loss
BREAK EVEN POINT - can be calculated using a formula TOTAL FIXED COSTS BEP = SELLING PRICE PER UNIT-VARIABLE COST PER UNIT If fixed costs = £ 8000, selling price per unit =£ 12, 8000 variable cost per unit = £ 4 12 - 4 Then 1000 units need to be sold to break even =1000
A break even chart can be used to show break even point Costs & Income Sales BEP Total costs Fixed costs Output/Sales
CASH FLOW • Cash flow is the flow of money into and out of the business. • Poor cash flow means there is not enough cash to meet the day to day business expenses. Cash flow forecasts help firms to anticipate problems APR MAY JUNE JULY AUG SEPT OPENING BALANCE 1000 4000 -1000 -6000 -2000 TOTAL RECEIPTS CASH IN 15000 12000 5000 16000 12000 TOTAL SPENDING CASH OUT 12000 10000 12000 CLOSING BALANCE 4000 -1000 -6000 -2000
- Diff between trading account and profit and loss account
- Diff between trading account and profit and loss account
- Trading profit and loss account layout
- Trading and profit and loss account vertical format
- Method of departmental accounting
- Discount received in statement of profit and loss
- Personal account real account nominal account
- Meaning of non trading concern
- Rumus gross benefit cost ratio (gross b/c)
- Ratio analysis