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

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

Extracts from this document...

Introduction

Transfer-Encoding: chunked A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity Assets – things they own Liabilities – things they owe (suppliers, loans/overdraft, and mortgage) Trading profit and loss word meaning Trading profit and loss statement - A trading, profit and loss account shows the business's financial performance over a given time period. 1. Turnover - the amount of money taken by a business in a particular period, for instance Abscon Ltd have a turnover of £1500,000 in 20014 and £1300,000 in 2013 2. Cost of sales - on an income statement, the cost of purchasing raw materials and manufacturing finished products, there cost of sales in 2014 totalled to £860,000 3. Opening stock – stock of an item at the beginning of the financial year, at 2014 they had £100,000 of opening stock 4. Purchases - To obtain in exchange for money or its equivalent; buy. 5. Closing stock – a business’s remaining stock at the end of the financial year. ...read more.

Middle

This measure deducts all expenses from revenue including interest expenses and operating expenses, but it leaves out the payment of tax. 13. Corporation tax - tax imposed on companies' profits 14. Profit after tax ? The net amount earned by a business after all taxation related expenses have been deducted 15. Dividend - a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves). 16. Retained profit - Retained profit is the profit kept in the company rather than paid out to shareholders as a dividend. Retained profit is widely regarded as the most important long-term source of finance for a business. Balance Sheet Balance sheet - A balance sheet shows the value of a business on a particular date. A balance sheet shows what the business owns and owes for the last day of the financial year. 1. Fixed asset ? an assets which is not consumed or sold over the course of the business, such as premises and fixtures and fittings. ...read more.

Conclusion

twelve months, but that instead need to be repaid in a year or more such as mortgage and capital employed Mortgage ? a legal agreement by which a bank lends money at interest in exchange for taking title of a property Employment of capital - The total amount of share capital and debt that a company has and uses Shareholders - somebody who owns a share in a business Share capital - part of the capital of a company that comes from the issue of shares Profit and loss account - A trading, profit and loss account shows the business's financial performance over a given time period. 1. Capital employed ? Fixed assets plus current assets minus current liabilities. Capital employed is the value of the assets that contribute to a company's ability to generate revenue 1. http://www.bing.com/search?q=meaning+of+turnover+&qs=n&form=QBRE&pq=meaning+of+turnover+&sc=2-20&sp=-1&sk=&cvid=45d240a4408749fc96c1db0c027bdb41&adlt=strict 2. http://www.investorwords.com/5484/cost_of_sales.html 3. http://www.businessdictionary.com/definition/opening-stock.html 4. http://www.thefreedictionary.com/purchase 5. http://www.investorwords.com/9203/closing_stock.html 6. http://www.businessdictionary.com/definition/gross-profit.html 7. http://www.businessdictionary.com/definition/expense.html 8. http://www.bing.com/search?q=meaning+of+wages&src=IE-TopResult&FORM=IE11TR&conversationid=&adlt=strict 9. http://www.bing.com/search?q=meaning+of+Salaries&qs=n&form=QBRE&pq=meaning+of+salaries&sc=0-16&sp=-1&sk=&cvid=d32f2c49eb2f4cb7ae59a87c568ffce4&adlt=strict 10. http://www.bing.com/search?q=meaning+of+Operating+profit+&qs=n&form=QBRE&pq=meaning+of+operating+profit+&sc=2-20&sp=-1&sk=&cvid=3fe9e8d95c834801a08eb388b4439c48&adlt=strict 11. http://www.investorwords.com/19143/net_interest_expense.html 12. http://www.investopedia.com/terms/p/profitbeforetax.asp 13. http://www.bing.com/search?q=meaning+of+corporation+tax&qs=n&form=QBRE&pq=meaning+of+corporation+tax&sc=0-20&sp=-1&sk=&cvid=5c072b9683ec43be9f8c29f4b6415612&adlt=strict 14. http://www.businessdictionary.com/definition/profit-after-tax.html 15. http://www.bing.com/search?q=meaning+of+dividend&qs=n&form=QBRE&pq=meaning+of+dividend&sc=1-18&sp=-1&sk=&cvid=9c7233331b824c3b927f89fb9556ca95&adlt=strict 16. http://www.tutor2u.net/blog/index.php/business-studies/comments/qa-what-are-retained-profits/ 17. http://www.businessdictionary.com/definition/fixed-asset.html 18. encyclo.co.uk 19. www.investopedia.com 20. www.thedreedictionary.com 21. http://www.bing.com/search?q=Bank+acount+meaning+&qs=n&form=QBRE&pq=bank+acount+meaning+&sc=0-13&sp=-1&sk=&cvid=2e48779b75fd496da303df6093ab2e7a&adlt=strict 22. http://www.bing.com/search?q=current+liabilities+definition&qs=AS&pq=current+liabilities+&sc=8-20&sp=1&cvid=a3008926bc1d43e3ae9dbc4bc70c25fd&FORM=QBRE&adlt=strict 23. http://www.bing.com/search?q=Creditors+definition&qs=n&form=QBRE&pq=creditors+definition&sc=2-20&sp=-1&sk=&cvid=88ffede09b214dd2b63b516631f544ff&adlt=strict 24. http://www.investorwords.com/6857/long_term_liabilities.html 25. http://www.investorwords.com/5440/capital_employed.html ...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. Sources Of Finance

    they are going to get if they prove successful and this could take even longer to be sent out to them, then depending on the terms and conditions of the grant it still may have to be paid back in the future, unlike hiring the assets which would mean the

  2. Profit & Loss Accounts and Balance sheet.

    is profit. A possible suggestion would be that Mr. Kong Han could decrease the purchase cost possibly by acquiring materials or goods from cheaper suppliers. Another thing that business could do is to increase sales as well perhaps by increasing price of products or more marketing techniques into their products.

  1. A2 Business CourseWork

    This can be done in a variety of ways including financial motivators as well as being treated in a fair and respectful way. 'An interesting job': Having an interesting job is probably the biggest motivator of all. Tesco will look to make each and every job interesting.

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

    Debtors' payment period. The calculation for this is: debtors divided by credit sales for year x 365 = debtor collection period in days. This shows how long it takes on average for debtors to pay for brought goods on credit. You should compare this with previous years to make sense of the result.

  1. Discuss the factors which a company may need to take into consideration when determining ...

    Investment opportunities may determine the level of dividends that a company pays out. "There is evidence to show that businesses which are growing quickly tend to select a policy of either no dividends or low dividends, but at a more mature stage of the business life cycle, increase the level of dividend distribution."

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

    Alpha Ltd. can improve their asset test ratio by selling fixed assets or agreeing long-term borrowing. Efficiency Ratio Efficiency ratios measure the effectiveness with which management controls the internal operation of Alpha Ltd. They measure three things, the extent to which assets are used to generate profits, how well stock is managed and the efficiency of creditor control.

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

    It helps Tesco figure out the performance of their business. Acid test ratio: current assets- stock Current liabilities Acid test ratio: 2053-929 -2756.0 The acid test ratio shows the assets compared to liabilities, like current ratios but by taking out the stock figure from the current assets, it shows how

  2. Sources Of Finance and Profit and Loss Accounts.

    from its owner (the lender) to a borrower who promises to return it according to the terms of the agreement, usually with interest for its use. If the loan is repayableon the demand of the lender, it is called a demand loan. If repayable in equal monthlypayments, it is an installment loan.

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