Finance and Accounts A2 Business Studies. Revenue Total Revenue = Price x Quantity Sold This figure is needed for –BREAK EVEN ANALYSIS –PROFIT AND LOSS.

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Presentation transcript:

Finance and Accounts A2 Business Studies

Revenue Total Revenue = Price x Quantity Sold This figure is needed for –BREAK EVEN ANALYSIS –PROFIT AND LOSS STATEMENT

Profit Profit = Total Revenue – Total Costs Normal Profit – This is the minimum needed for a business to stay in business Abnormal/Supernormal Profit – Anything above normal profits

Why Do We Have Accounts? Accounts are used by businesses for a number of reasons: They provide information for stakeholders Can help to attract investment or obtain sources of finance Reduces the chance for fraud To comply with legislation (limited companies) Allow the business to monitor their activities

Balance Sheet This is a snapshot of the firm’s position at a point in time Shows what a company owns (assets) and what it owes (liabilities)

Balance Sheet A guide to the structure of the assets of a company A guide to the level of gearing – the ratio of loan to share capital Gives a guide as to the degree of working capital – the amount the company has to be able to pay its everyday debts (current assets – current liabilities) Shows the total value of a firm at that moment in time