Financial accounts
Profit and loss account Introduction
In this section of this assignment I have been asked to interpret the contents of a trading and profit and loss account and balance sheet for snorkel. A profit and loss account is a document which a business uses to see where they are in terms of financial stability. A profit and loss account shows a business weather they are making a profit or loss. As well as that it also shows them where their finances are coming from in and out. It shows their cash inflow and outflow. A profit and loss account is important for a business to have because it shows them weather they are making a profit or a loss. As well as that they can see where their money is going and where it is being spent. Furthermore
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This money has come through sales of the business. This can be things like the products they sell to the public and other services that they offer. This is usually over 1 year in the businesses calendar. There is no formula to work this out however it is as basic as the amount of money a business has made from the previous selling …show more content…
Furthermore cost of sales is the cost that goes into producing a product. The cost of sales line appears near the top of the profit and loss income statement as it is a subtraction from the businesses net sales. The formula for this is beginning inventory + inventory purchases and expenses - ending inventory = cost of sales. This screenshot shows me as well as snorkel where they are spending their money and where that money from the business is going and being spent on. It also shows me how much they are spending on the item and for how much. However the brackets on the statement shows me that they are losing in this area. As you can see from the screenshot it shows that snorkel are spending their money on five different parts in order to run the
The purpose of an income statement is to report the revenue generated and the expenses incurred by a corporation for the past year. (Melicher, 2014) The gross revenue is the first item on the financial statement followed by several expenses and then the net revenue. One of the expenses a corporation incurs is the cost of goods sold, which is the amount of money it costs a corporation to produce or manufacture the items sold to generate a profit. The second expense on a financial statement is the cost of record keeping, preparing financial statements, advertising, and salaries grouped under the heading “Selling, general, marketing expenses”. The other expenses on an income statement are depreciation, interest expense, and the unavoidable income tax. (Melicher, 2014) Once all of these expenses haven been deducted from the gross revenue a company has an accurate depiction of their net
The company projects a Net Profit of $40,665 in our first year of operations, increasing to $139,944 in the second year and $317,688 in the third year. Our Cash Flow objective in the first year is ...
Businesses both large and small have competing priorities. Consumer demands, regulatory concerns, shareholder interests, and employee relationships all require attention from the business perspective. However, one of the highest priorities for any business is financial management. It is difficult, if not impossible, to meet the needs of a business without an adequate cash flow. In the short-term, financial deficits can be only a bump in the road, however long term cash flow difficulties indicate further intervention is needed. This further intervention is financial management. Finances in a business involve more than just an accounting of revenues and expenses. In order to be viable and ultimately successful,
A consolidated financial statement can be defined as the financial statements of a parent and its subsidiaries combined to form a single economic entity (AASB 10, 2011). The entity, which acquires the other entity, is known as the parent and the entity, which has been acquired, is known as the subsidiary. Consolidation financial reports arise when one entity purchases another entity, to then form a group.
Product costs must be transferred from Finished Goods to Cost of Goods Sold as sales are made. This requires a correct and accurate accounting of product costs per unit, to have a proper matching of product costs against related sales revenue.
11,240.00 13,455.00 15,670.00 Total Available Cash 15,740.00 24,213.00 34,756.00 Less: The.. Capital Expenditures 0 0 0 Operating Expenses 4,780.00 5,015.00 5,170.00 Interest 112.00 112.00 112.00 Dividends 0 0 0 Debt Retirement 0 0 0
Managerial accounting has changed over the years. Managerial accounting focuses on more than the financial aspect. We will be looking at how managerial accounting affects the business world today. Business also look to the economy, federal taxes, and the financial market so it can make the best decisions for their business.
The first article is on the first article is “Revenue management: the impact on business-to-business relationships” by Xuan Wang and David Bowie, published on 1st November 2009. The article aims to understand the topic of revenue management and business to business relationship management and also to find out whether is there a connection between the both also as well as explaining the support of the damage revenue management can eventually come up to do a business to business relationship if there is any connection between them. The article starts by explaining what revenue management is all about and how it first began. According to this article the revenue management as a result of an airline that was allowed some freedom in the industry and also to set their own price market. The theory of revenue management was developed to help liberate some industries in terms of market demand and face up some challenges of competition. It also mentions about that in the hotel industries that also have been adapted revenue management practices and also, have increased their revenue by 3 to 7 percent, which results in substantial profits without the capital expenditures. The second section of this article also states that about the impacts that revenue management has on the customer affiliation in the hotel industry and picks out on a specific area of a customer affiliation in relation to the revenue management is much undervalued area of research and not enough of information was found in the topic, but insufficient information that exists that if the hotel industries targets more to their revenue management strategies, this might affect their affiliation with the customers, this means loss of valued customers visiting around(Wang and Bow...
Loss is the excess of expenses over revenue in an accounting year and represents increase in owners’ equity.
The accounting cycle is a series of steps starting with recording business transactions and leading up to the preparation of financial statements. This financial process demonstrates the purpose of financial accounting–to create useful financial information in the form of general-purpose financial statements. In other words, the sole purpose of recording transactions and keeping track of expenses and revenues is turn this data into meaning financial information by presenting it in the form of a balance sheet, income statement, statement of owner’s equity, and statement of cash flows.
Accounting aids the government and organisations in decision making for their financial stability. This numerical data helps solve real life problems and contributes to how the economy and businesses perform.
The statement of profit or loss is also known as income statement and it’s equation is revenue minus expenses equals profit or loss. The statement of profit or loss summarize the revenues and expenses of a business and also shown the ability of a business to generated business. The total profit or loss that generated in an organization during an accounting period can be seen through the income statement. For example, if the expenses of the company are higher than revenues, the company will get a loss in the business. However, the company will generate a profit when the revenues are greater than the
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
Managing an organization’s financial operation requires a good understanding of the economy and ways to maximize revenue. For an organization to operate on a daily basis, adequate cash flow is required. Poor cash management within an organization might make it hard for the organization to function because there may be shortage of cash in case of inconsistences in the market. In most companies, management is interested in the company 's cash inflows and outflows because these determines the availability of cash necessary to pay its financial obligations. Management also uses this information to determine problems with company’s liquidity, a project’s rate of return or value and the timeliness of cash flows into and out of projects (used as inputs
Balance sheets are very important for parties like suppliers, investors, competitors, customers, etc. to know the company’s position, company’s strength and company’s weaknesses. Balance sheets helps to ascertain the amount of capital employed in the business so that we can further calculate different types of ratios. Some important objectives of preparing balance sheets are: