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 Furthermore a profit and loss account is a historical document that is used by a firm or in this case snorkel to see what they have done wrong in the past and see how they can move on and fix the problems that they have caused. Furthermore it can be described as a financial statement showing a company 's net profit or loss over a period of time. Also a profit and loss account can give you control over expenses this is because profit and loss accounts provide information about various kinds of expenses this could be incoming or outgoing off the business.
Turnover is the amount of money a business has received over a certain period of time. 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 year.
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...nses as they may first gather their financial statements such as their bills for everything and other things etc. Once they have done that they would create a list of monthly expenses which includes their recurring expenses e.g. things like bills. Once they have found this they would review their expenses and organise their purchases in an expense worksheet so that they can see where their money is going. What they would do is separate their expenses into three categories the first would be fixed expenses which are expenses which is the payment will remain the same then there is flexible expenses which are expenses that change each month depending on what you do for equipment and that last thing is optional expenses so they are personal expenses that the business has more control over and how much they decide to spend so this could be things such as expenses etc.
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