• 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

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. 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.

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

    World Trading Organization WTO: The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development.

  1. Accounting case study. I am writing this report to explain the contents thats on ...

    There was no purchase returns for the year 2007. Closing stock This is the value of finished products, work in progress and raw materials held in the business at the end of the year. The closing stock was �7,400. Gross Profit This is the difference between the businesses total revenue

  2. Principles of accounting

    the accounting records of the business is when he brings in personal property as new capital into the business, or when he withdraws cash from the business for personal expenses. Best recommended for a sole trader. Money Measurement Money is used as the basic measuring unit for financial reporting.

  1. A2 Business CourseWork

    Tesco will look to try and appoint the best possible person for a managerial role by carrying out rigorous assessments during the employment process. 'To be treated with respect': Being treated with respect is key to feeling happy. If you are not treated with respect you will become disgruntled and not complete your job to your maximum potential.

  2. 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

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

    Gross profit percentage: This will show us the gross profit of Tesco as a percentage of the turnover (sales and any other income that a business gets). Gross profit percentage is also sometimes called gross profit margins. Net profit percentage: This calculation takes the idea of profitability one stage further

  2. Define the terms used in a trading and profit and loss account and balance ...

    Salaries - a fixed regular payment, typically paid on a monthly basis but often expressed as an annual sum, made by an employer to an employee, especially a professional or white-collar worker 10. Operating profit - profit from business operations (gross profit minus operating expenses)

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