SBMA7000 Financial Management

Business accounts

Business accounts

ANY COMPANY TRIAL BALANCE

Trial balance

AS AT 31 DECEMBER 2009
DEBIT 25,000 5,000 12,000 3,000 10,000 15,000 5,500 12,500 150,000 100,000 31,000 18,000 15,000 24,000 74,000 250,000 250,000 CREDIT

EQUIPMENT - COST EQUIPMENT ACCUMD DEPN VEHICLES - COST VEHICLES ACCUMD DEPN STOCK AS AT 1/1/2006 DEBTORS BANK CREDITORS SALES PURCHASES SALARIES & WAGES VEHICLE RUNNING EXPENSES GENERAL EXPENSES DRAWINGS CAPITAL

1. 2.

THE CLOSING STOCK IS 20,000 DEPRECIATION CHARGES FOR THE YEAR ARE 2,500 (EQUIPMENT) AND 3,000 (VEHICLES) Business accounts

Stock
Increased by Purchases

Decreased by Sales
Affects Cost of Sales Therefore Affects Profit

Business accounts

Cost of sales

COST OF SALES

STOCK AVAILABLE AT START OF PERIOD STOCK PURCHASED DURING THE PERIOD TOTAL STOCK AVAILABLE TO SELL STOCK SOLD DURING THE PERIOD STOCK UNSOLD

10,000

100,000

110,000

90,000 20,000 110,000

THEREFORE: COST OF SALES = OPENING STOCK + PURCHASES CLOSING STOCK Business accounts

The trading account

Sales

Less Cost of Sales

Equals Gross Profit

Business accounts

The profit and loss account

Gross Profit

Plus Other Income

Less Expenses/Overheads Equals Net Profit

Business accounts

Profit and loss account sole trader

ANY COMPANY PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31 DECEMBER 2009
SALES 150,000

OPENING STOCK PURCHASES

10,000 100,000 110,000

CLOSING STOCK

(20,000)

COST OF SALES

90,000

GROSS PROFIT

60,000

SALARIES & WAGES VEHICLE RUNNING DEPRECIATION GENERAL EXPENSES

31,000 18,000 5,500 15,000 (69,500)

NET PROFIT/(LOSS)

Business accounts

(9,500)

The balance sheet

Fixed Assets Order of permanence Current Assets Current Liabilities Working Capital Long Term Liabilities Net Worth Owners Capital

Business accounts

ANY COMPANY

Balance sheet

BALANCE SHEET AS AT 31 DECEMBER 2009

FIXED ASSETS EQUIPMENT VEHICLES 17,500 6,000 23,500 CURRENT ASSETS STOCK DEBTORS 20,000 15,000 35,000 CURRENT LIABILITIES BANK CREDITORS 5,500 12,500 (18,000) NET CURRENT ASSETS 17,000

NET ASSETS

40,500

FINANCED BY: CAPITAL BROUGHT FORWARD PROFIT/(LOSS) FOR THE YEAR LESS DRAWINGS CARRIED FORWARD
Business accounts

74,000 (9,500) (24,000) 40,500

9

Limited company accounts

TURNOVER COST OF SALES GROSS PROFIT DISTRIBUTION COSTS ADMIN EXPENSES OPERATING PROFIT FINANCE COSTS PROFIT BEFORE TAX TAXATION PROFIT AFTER TAX

150,000 (90,000) 60,000 (18,000) (30,500) 11,500 (2,000) 9,500 (2,000) 7,500

Business accounts

10

Legislation
Sole traders

Required to complete tax return Self Assessment Flexibility of format of accounts

statutory format for accounts No flexibility of format of accounts Possible audit requirement

Limited companies

Business accounts

11