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Profit and Loss Account

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Introduction

Profit and Loss: The profit and loss account is a financial document that shows how much profit or loss a business has made for a period of time, usually one year. It contains a list of that generates money for the business i.e. sales and a list of factors that costs the business i.e. wages. Using a profit and loss would be beneficial for me as at it can see how much profit or loss I have made over a period of time therefore if I see that my profit it steadily decreasing over the years, then I know there is something wrong as it will point it out. I can then do things to stop this from happening for example, I could reduce expenses and also try an increase sales. Doing this will not only improve my profit and loss account, but it will allow me to meet my objectives of decreasing expenses. Another benefit it will have to my business is that it can be used to convince manager to give me a bank loan because they would want some reassurance that I will be able to pay the loan back and a profit and loss will be able to convince them for the reason that it shows how profitable my business is. ...read more.

Middle

charge �22,000 a year therefore I believe I have received a good price for the property One crucial expense for my business is insurance. Without insurance I won't have the reassurance that my business will be covered in case of any such as flood or earthquakes therefore I have decided to take out insurance on my business. The insurance has cost �145 a month therefore the figure I have entered for my profit and loss account is �1,740. Taking out insurance will save me in the long run because if my building or equipments get damaged then I won't have to pay large sum of money to get it replaced because it will be paid for by the insurance company. My equipments cost totals up to �4,791 and was gained from my primary research after researching different prices for each equipment and choosing the lowest price. By doing this it has allowed m to meet my aims of decreasing expenses which will lead to me meeting my aims of increasing profit and therefore will result in a better profit and loss account. The �4,791 figure in the profit and loss account in only entered once because I will only by them once so when I am creating next years or the years after, I won't be required to enter this figure in. ...read more.

Conclusion

Doing this will improve my profit and loss as it means my wages expenses would decrease and therefore, will allow me to have more money to spend on other expenses. Another way I can improve my profit and loss account is to find cheaper suppliers. By doing this it will decrease my cost of sales which will improve my gross profit. This will lead then increase my net profit which will then ultimately increase my retained profit. Not only will it improve my profit and loss account, but it will also allow me to meet my objectives of finding cheaper suppliers which will then allow me to meet my aim of increasing profit. Furthermore, I could lease back my equipment. This is when I sell one of my equipments for example my pizza oven and ten hire it back paying the new owner on monthly bases. Doing this will allow me to have large sum of cash at one time and then pay a portion to use it. The final way an can improve my profit and loss account is to try an increase sales for examples through increase advertising and promotions. By doing this, I will be meeting my aims as well as improve the figures in my profit and loss account. ?? ?? ?? ?? ...read more.

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