Part of The Student Room Group

  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Accounting case study. Dear Mr Han I am writing this letter to explain how the profit and loss account and balance sheet that you have received works.

Extracts from this document...

Introduction

Name: Hannah Clark - Year/Group: BTEC National Diploma in Business - Yr1 - Lecturer: Richard Taylor Unit 5 - Introduction to Accounting Waters, Gilmour, Mason and Wright Floyd House, Grantchester Meadows, Oxford, OX3 5DS Mr K Han 32 Crookdale Lane, Ipswich, IP32 6TY 31 July 2010 Explanation on how the profit and loss account and balance sheet Dear Mr Han I am writing this letter to explain how the profit and loss account and balance sheet that you have received works. I would like to start off by explaining what the purpose of a profit and loss account is. This makes an accurate calculation of the profit or loss made by the business over a certain period of time. ...read more.

Middle

- for a manufacturing organisation this is the value of raw materials purchased; for a service business it would be the cost of items bought to sell to customers or used to provide a service to customers. The costs of goods sold are calculated by opening stock + purchases - purchase returns - closing stock. This is shown on my example profit and loss account. Overheads are things like rent and rates and they do not change throughout the year no matter how much they sell, there is also an example on my profit and loss account. Gross profit is calculated by the net sales - cost of goods sold. ...read more.

Conclusion

received is when the business may sell a product o a service on behalf of another organisation and then they may receive commission for selling the other businesses products or services. This is an explanation on how you know that the accounts balance. Capital + net profit - the amount the owner has paid off = less drawings. So net assets and less drawings are the two figures on the accounts that have to be the same for the account to balance. I hope that this letter has helped you figure out how the profit and loss accounts and balance sheet works. Yours sincerely Hannah Clark Accountant Enc. ?? ?? ?? ?? \\Adata1\Users\hannah.clark01\My Documents\Introduction to Accounting\p4 k han letter.doc 1 hannah.clark01 09/06/2010 hannah.clark01 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Accounting & Financial Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

or


Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Accounting & Financial Management essays

  1. Assignment 4: ethical issues. The community. P4 and M3

    The purpose of this; is because their economy is not as high as the rest of the economies in multi, developed countries. Businesses take advantages of those countries in order to make higher profits. They produce their product in poor environment but they seem to sell it in developed countries such as united state and United Kingdom.

  2. A2 Business CourseWork

    Tesco now measure their carbon footprint and monitor it regularly publishing the findings at http://www.tesco.com/climatechange/carbonFootprint.asp. Tesco have commissioned Environmental Resources Management Limited (ERM) to help them document and monitor their overall carbon footprint. What they found: Tesco found out that their total amount of carbon dioxide output up to February

  1. Profit and Loss Account

    The quantity I expect to sell was gained through my sales forecast. In addition, my quantity sold was taken from my sales forecast. My sales forecast showed that I will gain 66 customers a day. I then multiplied this number by seven to get the amount of customers I will

  2. Btec Business Level 3 Year 1 - Introduction to Accounting

    And deferred shares (the deferred share requires that dividends are only paid after certain amounts are paid out to ordinary shareholders). A mortgage is a large loan, income coming into the business, normally given for the buying of property. Business can take a mortgage and use it as an investment.

  1. Birmingham Bullring- Website Case Study

    on how to get there by: * Train * Bus/ Coach * Bike * Car * Boat * Air It also gives local information and maps of the Bullring car parks. News and events for Bullring/ Birmingham Bullring has a busy calendar of events to bring to every customer, this

  2. Profit & Loss Accounts and Balance sheet.

    This signifies the ratio is worse. The ratio is worsened because Mr. Kong Hans Gross Profit Percentage of sales was 45% at the end of year 2006 while it has been changed from 45% to 43% in the year 2007. The possible reason for this is because increase in the price of goods they produce.

  1. Principles of accounting

    30# Stock, 1 January 2005 805 Provision for depreciation 118# Purchases 4200 Rent and rates 720# Prepaid rent and rates 100# Carriage inwards 40 Light and water 120# Miscellaneous expenses 130 Depreciation expenses 118 # 9243 9243 # adjusted figures Nat's final accounts and balance sheet will look like this:

  2. Interpret the contents of a trading and profit and loss account and balance sheet ...

    by actually considering the profit as a percentage of turnover after all the other expenses have been taken out.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work