Profit and Loss accounts, balance sheets, and financing a business

Sales turnover minus cost of sales

Sales turnover

It is gross profit margin with sales turnover added minus cost of goods sold

The profit made after all costs and revenues have been accounted for. It is gross profit plus non-sales revenue minus operating costs.

Profit and Loss account is a record of revenues and costs of a business over a period of time such as 6 months or a year. While trading account is part of a profit and loss account which shows sales turnover, cost of sales and changes in stocks.

Profit and Loss account is a record of revenues and costs of a business over a period of time such as 6 months or a year. While trading account a completely different account which shows sales turnover, cost of sales and changes in stocks.

A part of the profit and loss account which shows what has happened to net profit.

A part of the profit and loss account which shows what the gross profit is.

It is an account which tells the accountant what to buy for next years stock

Cost of production such as the cost of raw materials, direct wage costs and changes in stock.

Cost of the product sold. Such as £3.25 for a jar of nutella.

The fall in value of fixed equipment and buildings over time as they wear out.

The fall in value of the product sold as it loses it's value.

A sheet which contains assets and liabilities.

A sheet which contains goods sold this year in relation with goods sold last year

An asset is what a business owns. A fixed assets is something a business cannot sell or turn into cash easily whilst a liquid asset is something that can be turned into cash or sold easily. Cash is a liquid asset.

An asset is what a business owes. A fixed assets is something a business cannot pay back whilst a liquid asset is a debt which the company can pay back.

A liquid asset is easily turned to cash and a current asset is not.

Nothing, they are the same.

A liability is what the business owes. A current liability is a liability in which the business will have to pay within the next 12 months. The most important current liability is creditors. When a company buys a product is usually doesn't have to pay for the product until at least 30 days. These are trade creditors of the business, short term loans are current liabilities. A long-term liability is what the business has to pay in more than 12 months. This can include mortgages, long term loans.

What the business wants to buy but doesn't have enough money. Something expensive is a long term liability and something cheap is a current liability.

GPM=(Gross profit / sales turnover) x 100

GPM=(Sales turnover / gross profit) x 100

NPM=( net profit / sales turnover) x 100

NPM=( sales turnover / net profit) x 100

Trade credit is when businesses don't have to pay for at least a month for its goods after the have been delivered by the suppliers. It means that the suppliers lend money for a month for 'free'. Sometimes companies may owe too much money and suppliers may stop supplying. If the business owes too much money it is in danger of going bankrupt, leaving the debt unpaid.

Factoring is when you reduce the amount of money you borrow on an overdraft. It lowers the debt the business has to pay in the longterm

Factoring

Trade credit and factoring are the same things.

Large public limited companies can borrow money through the city of London by issuing debentures. These are long term loans for between 5 to 25 years. Interest has to be paid on the loan.

Grants is money given to a business by a large number of bodies or the government on a selective basis. It is usually small businesses that benefit from grants. Grants can be lengthy and there are lots of from to fill in . It can frustrating and overwhelming. Also businesses have to prove they are using the money wisely.

Partnerships or sole traders can borrow money through the city of London by issuing debentures. These are long term loans for between 5 to 25 years. Interest has to be paid on the loan.

Grants is money given to a business by a large number of bodies or the government on a selective basis. It is usually small businesses that benefit from grants. Grants can be lengthy and there are lots of from to fill in . It can frustrating and overwhelming. Also businesses have to prove they are using the money wisely.