3.4 Final Accounts

The balance sheet is a financial document

• that shows the yearly incomes

• that is a snapshot of the value of assets, liabilities and the long-term sources of finance

• that looks at the short-term financial position of the business

• that is done 4 times a year

The profit and loss account

• shows a business' cash flow

• shows the firm's trading activities over a period of time, usually a year (including revenues and costs)

• shows the value of assets and liabilities

• has 4 sections - trading, p&l , appropriation & dividend accounts

The _________________ includes gross and net profits

Gross profit is calculated:

• Revenue - Expenses

• Sales - Variable costs

• Turnover - Expenses

• Sales Revenue - Cost of Sales

Expenses is also known as (choose the most appropriate)

• Fixed costs

• Overheads

• Cost of goods sold

• Expenditure

Direct costs are similar to which cost the most (choose the most appropriate)

• Fixed costs

• Expenses

• Variable costs

• Cost of Sales

Salaries are an example of _________________ in the profit and loss account

• Expenses

• Cost of sales

• Liabilities

• Retained profit

Raw material costs are an example of _______________ on the P&L account.

• Cost of sales

• Expenses

• Overheads

• Variable costs

A bank loan would be stated on which account?

• Profit & Loss as a cost of sales

• Balance Sheet as a Non-current liability

• Profit & Loss under Interest and Tax

• Balance Sheet under the Equity section

Inventory is a

• Current Asset

• Current Liability

• Long-term Liability

• Expense