FINAL ACCOUNTS

Trading Account – shows Gross Profit

Profit and Loss Account – shows Net Profit

Balance Sheet – shows what the business owns and owes and how it has been financed.

TRADING ACCOUNT

£ £ £

Sales

-Returns in

-Cost of Sales

Opening Stock

+Purchases

- Returns out

- Closing Stock

Cost of Sales

GROSS PROFIT

Gross Profit = Sales – Cost of Sales

27,500

1,000

26,500

9,000

15,000

500 14,500

3,750

19,750

6,750

23,500

PROFIT AND LOSS ACCOUNT

£ £

Gross Profit

+ Rent received

-Electricity

-Stationery

-Rates

-Interest on loan

-Advertising

-Insurance

-Sundry Expenses

-Telephone

NET PROFIT

Net Profit = Gross Profit - Expenses

6,750

2,000

8,750

510

125

756

159

845

545

124

400 3,464

5,286

BALANCE SHEETFIXED ASSETS

Premises

Machinery

Motor Van

CURRENT ASSETS

Cash in hand

Cash at bank

Stock

Debtors

CURRRENT LIABILITIES

Creditors

Working Capital

LONG TERM LIABILITIES

Capital

+ Net Profit

- Drawings

Bank Loan

Mortgage

80,000

13,200

8,700 101,900

970

10,050

3,750

1,750 16,520

9,000

7,520

109,420

80,000

5,286

85,286

14,86670,420

9,000

30,000

109,420

BALANCE SHEET

Mortgage

Bank Loan

- Drawings

+ Net Profit

Capital

LONG TERM LIABILITIES

Working Capital

Creditors

CURRRENT LIABILITIES

Debtors

Stock

Cash at bank

Cash in hand

CURRENT ASSETS

Motor Van

Machinery

Premises

FIXED ASSETS

80,0005,286

85,28614,866 70,420

9,00030,000

109,420

109,420

80,00013,200

8,700 101,900

970

10,0503,7501,750 16,520

9,0007,520

BREAK EVEN ANALYSIS

Break even is the point where:

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

BEP =TOTAL FIXED COSTS

SELLING PRICE PER UNIT-VARIABLE COST PER UNIT

If fixed costs = £8000,

selling price per unit =£12,

variable cost per unit = £4

Then 1000 units need to be sold to break even

8000

12 - 4=1000

A break even chart can be used to show break even point

Fixed costs

Total costs

Sales

BEP

Output/Sales

Costs & Income

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 4000 -1000 -6000 -2000

TOTAL RECEIPTS

CASH IN

15000 12000 5000 5000 16000 12000

TOTAL SPENDING

CASH OUT

12000 12000 10000 10000 12000 12000

CLOSING BALANCE 4000 4000 -1000 -6000 -2000 2000