1. Year 13 A2 Business Studies Company accounts

2. 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 Balance sheet is like a photograph at that point Income statement is similar to a video recording of the previous time period

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 £ Depreciation10,000 Electricity20,000 Gas15,000 Cost of Sales240,000 Rent80,000 Salaries25,000 Sales500,000 Complete an income statement for the business

9. 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

10. 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