• 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. A2 Business CourseWork

    This is helpful to staff to allow them to be confident in their new jobs. It will also help them build relationships with other colleagues and managers. Tesco set a target of 10% of staff being trained. Because it is the first year they do not have a current performance

  2. 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

  1. Profit and Loss Account

    This number was then multiplied by my average selling price of �4.21 to get the sales revenue of �94,069. Cost of sales is the amount it costs to makes the sales i.e. the raw materials. The figure of this was gained through my cash flow forecast and I have estimated

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

    Net profit for the year was �11,325 (27,600 - 16,275) Fixed Assets This is items that the business has brought and will use for an extended period of time. These are frequently called tangible fixed assets. When fixed assets are on the balance sheet it will show the original prices

  1. Unit 2 - Investigating Business

    Private limited company - private limited companies are normally small businesses normally they are run by family or a small group of people. A majority of them would put in money. The more the money an individual puts in the more power they would have in the business.

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

    well a business can meet its liabilities without having to sell stock. Profitability: Ratios can show how profitable a business really is, either as a snapshot or overtime. The three ways to find so out are: * Gross profit percentage * Net profit percentage * Return on capital employed (ROCE).

  2. Balance sheet for Dolores boutique

    The closing balance was -£17915 which means they did not make and profit. For Dolores boutique to avoid a negative cash flow, they can decrease their purchases for that month from £22500 to £18000. November In November Dolores boutique made £50400 in sales which is a lot higher than the previous months.

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