Trading profit and loss account and balance sheet exercises pdf
A balance sheet is usually completed at the end of a month or financial year and is an indicator of the financial health of your business. If net realisable value is higher than cost, then cost is taken, as valuing stocks at a higher value would not be prudent, i. If your gross profit margin decreases over time you will need to determine the reason and take action to address the decline. A sufficient amount of cash and other short-term assets must be available when needed.
Six years later his condensed financial accounts for the last three years are summarised below N. Key questions to be identified in liquidity analysis include: A trading account is prepared very much like a manufacturing account but substituting the production cost of completed goods for the usual purchasing figure see exercise 2.
Usually produced monthly, this is a summary of income and expenses for your business. A fall in net profit margin generally means you are paying more in expenses, which needs to be monitored. Other useful ratios 1 Stock market ratios a Earnings per share:
Non-current liabilities Items not expected to be settled within the next 12 months, such as mortgages on buildings and long-term loans. Key questions to be identified in liquidity analysis include: The manufacturing organisation will still need a trading and profit and loss account. A retailer, for example, will purchase various items from various suppliers, and add a profit margin. In this instance, a manufacturing account is required in order to arrive at the final cost of manufacture.
A sufficient amount of cash and other short-term assets must be available when needed. The debit to stock account for closing stock is the value of the current asset of closing stock which will be included in the balance sheet, as we shall see later. If the latter, then cash receivables or payables or both should be omitted from the investment base. The net profit margin is an indicator of how much profit you make before tax from every dollar you spend.