profit and loss + balance sheets
The purpose of final accounts is to give a 'snap shot' of a company's financial position at a given point in time.
PROFIT AND LOSS ACCOUNT LAYOUT:
PROFIT AND LOSS ACCOUNT LAYOUT:
EXAMPLE:
Balance sheet requirements
Fixed assets
Items that the company owns and does not intend to sell - FAs help the business provide goods and services:
Current assets
Items that the company owns and intends to turn into money:
Current liabilities
Short-term debts that the firms owes:
Long-term liabilities
Long-term debts that the firm owes:
Shareholder funds
A firm's long-term finance owed by the company to its shareholders:
Fixed assets
Items that the company owns and does not intend to sell - FAs help the business provide goods and services:
- land
- premises
- machinery
- plant
- vechiles
Current assets
Items that the company owns and intends to turn into money:
- stock (raw materials/components, partly finished stock and finished goods)
- cash (cash at bank and cash at hand)
- debtos (people who owe YOU money)
Current liabilities
Short-term debts that the firms owes:
- overdrafts
- short-term loan
- creditors (people who we owe money TO)
Long-term liabilities
Long-term debts that the firm owes:
- mortgage
- long-term loan
- debentures (long-term fixed interest loans)
Shareholder funds
A firm's long-term finance owed by the company to its shareholders:
- reserves
- retained profit
- shareholders capital
BALANCE SHEET LAYOUT:
EXAMPLE: