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Year 13 A2 Business Studies

Year 13 A2 Business Studies. Company accounts. Company accounts. There are two main documents: Income statement (previously called profit and loss account) Balance sheet. Company accounts. Legal requirements Used by stakeholders (see handour/weebly)

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Year 13 A2 Business Studies

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  1. Year 13 A2 Business Studies Company accounts

  2. Company accounts • There are two main documents: • Income statement (previously called profit and loss account) • Balance sheet

  3. Company accounts • Legal requirements • Used by stakeholders (see handour/weebly) • Show financial strengths and weaknesses of the company • Used to analyse the performance of company • Both based on historical data • Income statement is similar to a video recording of the previous time period Balance sheet is like a photograph at that point

  4. Income statement • describes the income and expenditure of a company over a time period (usually 1 year) • show the profit or loss made by the company (income - expenditure) • Purposes – see handout/weebly

  5. Income statement - Structure • Revenue / turnover / income / sales • Costs of sales / cost of goods sold • Gross profit • Expenses / overheads • +/- Exceptional items • Operating profit • Finance income • Finance costs • Profit before taxation • Taxation • Profit for year / Profit after tax • Earnings per share • Dividends / Retained Profit

  6. Income statement - Structure • (a) Revenue / turnover / income / sales • (b) Costs of sales / cost of goods sold • (c) Gross profit (a – b) • (d) Expenses / overheads • (e) +/- Exceptional items • (f) Operating profit (c – d) or (c – d +/- e) • (g) Finance income • (h) Finance costs • (i) Profit before taxation (f + g – h) • (j) Taxation • (k) Profit for year / Profit after tax (i – j) • Earnings per share • Dividends / Retained Profit

  7. How do you calculate? • Gross profit? • Operating profit? • Profit before tax? • Profit after tax? • Earnings per share? • See previous slides to see how you work these out

  8. Task 1 • Financial Data for F. Flintoff Limited – 31/10/09 £ • Depreciation 10,000 • Electricity 20,000 • Gas 15,000 • Cost of Sales 240,000 • Rent 80,000 • Salaries 25,000 • Sales 500,000 • Complete an income statement for the business

  9. Task 2 • Financial Data for Chris Mass Limited – 31/12/07 £ • Depreciation 5,000 • Electricity 25,000 • Gas 12,000 • Cost of Sales 200,000 • Rent 60,000 • Salaries 30,000 • Sales 1,500,000 • Petrol 2,000 • Insurance 4,000 • Complete an income statement for the business

  10. Task 3 • Financial Data for B. Piper Limited – 31/12/08 £ • Wages 50,000 • Electricity 25,000 • Raw materials 150,000 • Telephone 12,000 • Rent 35,000 • Taxation 20% of profit • Salaries 130,000 • Marketing 250,000 • Revenue 3,800,000 • Insurance 3,000 • Equipment hire 40,000 • Finance income/costs £100,000/ £50,000 • Complete an income statement for the business

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