Year 13 A2 Business Studies 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) Show financial strengths and weaknesses of the company Used to analyse the performance of company Both based on historical data Balance sheet is like a photograph at that point Income statement is similar to a video recording of the previous time period

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

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

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

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

Task 1 Financial Data for F. Flintoff Limited – 31/10/09 £ Depreciation10,000 Electricity20,000 Gas15,000 Cost of Sales240,000 Rent80,000 Salaries25,000 Sales500,000 Complete an income statement for the business

Task 2 Financial Data for Chris Mass Limited – 31/12/07 £ Depreciation5,000 Electricity25,000 Gas12,000 Cost of Sales200,000 Rent60,000 Salaries30,000 Sales1,500,000 Petrol2,000 Insurance4,000 Complete an income statement for the business

Task 3 Financial Data for B. Piper Limited – 31/12/08 £ Wages50,000 Electricity25,000 Raw materials150,000 Telephone12,000 Rent35,000 Taxation20% of profit Salaries130,000 Marketing250,000 Revenue3,800,000 Insurance3,000 Equipment hire40,000 Finance income/costs £100,000/ £50,000 Complete an income statement for the business