Domestic dog home

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Domestic Dog Homes

What is a profit and loss account?
A profit and loss account is a yearly based financial document which shows the amount of money which is lost or gained within that financial year. This document helps banks determine the overall success of the business within the last year and when a business is trying to obtain credit, they would want to see the profit and loss to see their financial status. A profit and loss account also helps the business set forecasts for the following year so they can try to improve the profits and reduce costs to ensure they are successful.  On the profit and loss account, it will state all the businesses expenditure and the businesses incoming revenue. Here is an example of a profit and loss account:

What is a balance sheet?

A balance sheet shows the financial position to a business; it will state all the money the business owns externally and the company assets. An asset is something that the business owns for example property. A liability is something that the business owes externally and this will be subtracted from the assets.  A balance sheet can be used to help the business analyse the businesses position and to improve their actions. Also the balance sheet will be useful to investors and shareholders so they can value the company.

A balance sheet consists of the following information:

  • Current Assets
  • Fixed Assets
  • Current Assets
  • Working Capital
  • Current Liabilities
  • Long Term Liabilities
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I am now going to create a table which will explain all the different elements to a Profit and loss account:

I am now going to create a table which will explain all the different elements to a balance sheet:

Domestic dog homes – Did they make profit or not?

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The image above shows that Domestic Dog Homes did make profit, the gross profit before any deductions was £102,250 and net profit was £42,850.

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