GCSE Business Studies Coursework - Balance sheet, Profit/Loss Account.

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GCSE Business Studies Coursework: Raphael’s                                                                                                                          June 2003

GCSE Business Studies Coursework

Task one:

Balance: Balance Sheet

Cash: Both

Bank: Both

Capital: Profit/Loss Account

Motor Vehicle: Both

Equipment: Profit/Loss Account

Debtors: Both

Creditors: Both

Drawings: Both

Stationary: Profit/Loss Account

Telephone: Both

Electricity: Both

Delivery: Both

Rent: Balance Sheet

Closing Stock: Both

Sales: Balance Sheet

Opening Stock: Both

Cost of Goods Sold: Profit/Loss Account

Gross Profit: Profit/Loss Account

Task two:

Profit/Loss Account for quarter ending 31/08/03

Task 3

Balance Sheet for the quarter ending 31/08/03

Task four:

Gross Profit is sales turnover minus cost of sales.

Net Profit is gross profit minus costs.

Fixed Assets are assets to a business that is central to its operation and not traded.

Current Assets are available cash and other assets that can be converted into cash within a year.

Current Liabilities are business liabilities that are due to be cleared before the end of the financial year.

Long Term Liabilities are business liabilities that can be cleared at any time.  Usually longer than one year.

Capital is material wealth in the form of money or property.

Drawings are money taken out by the owner for his own personal use.

Task five:

A Profit & Loss Account (also known as a P&L) is one of the most commonly produced forms of . Whereas a  shows what a business owns, owes and is owed, a Profit & Loss Account shows how much it has earned and spent during a particular period. (Bear in mind, however, that a P&L does not show you how a business earned or spent its money; that information would be provided by producing a Cash Flow Statement.) Your Bank will almost certainly ask to see some kind of P&L for your business at some point; as your company grows and time goes by, you may be asked to produce a P&L on a regular basis.

All types of business usually produce some form of P&L. Even though and  are not legally required to, they are likely to produce an annual P&L for tax purposes. , who are required to produce accounts under , often produce not just annual P&Ls but also a series of interim P&Ls. These interim financial statements can be used as part of the internal controls of a business and are often referred to as management accounts; the results they show allow the business to compare its actual performance against any budgets, forecasts or targets it has set.

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Both annual and interim P&Ls serve a similar purpose: they calculate the financial return that a business has received from its activities. They include details of:

  • Sales - also referred to as  
  • Purchases and expenditure (known as )
  • The  (or loss) that the business made over the period in question.

The relationship between these items can be explained as:

Sales minus Costs = Profit

Like all financial statements, P&Ls include accounting or financial terms that you may not be familiar with at

present.

A Balance Sheet is ...

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