Professional Documents
Culture Documents
Small businesses, (non Ltd.), are not required to do it but is still in their interests to do it.
Employees
Managers
Competitors
See how the business is doing and where the expenditure is on.
Government
Tax purposes. Where the profits are being made and if the businesses are returning to
the economy adequately.
Financiers
Potential investors
Appropriation Account
How a firms profits have been utilised usually to the business (retained profits),
shareholders and the tax office.
Balance sheet
Trading Account/ P&L is a record of a businesses trading activity over a period of time
Usual time frame is 12 months but can also be viewed as a progressive document
Trading account is the top section of the P&L and results in a Gross Profit figure
Gross profit = sales revenue cost of goods solved (COGS)
Subtract expenses from the gross profit to give you the operating or net profit
Revenue Expenditure: The costs associated with producing the goods or service
Capital costs are not subtracted from sales to get profit: use instead depreciation
Balance sheet
Used by
Ultimately tells us
Fixed assets
Resources that will be used and re-used over more than 1 year. Can be
Trade creditors
Bank overdraft
Bank loans
Mortgages
Capital, i.e. finance which is not borrowing (share capital provided by owners
or shareholders)
Retained profit (reserves) not a pot of money will have been spent on possets