Profit and loss accounts

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  • Created by: Leah
  • Created on: 07-02-13 17:47
what is a profit and loss account?
records all of the indirect costs of running the business and shows how a business is performing
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how do you work out gross profit?
the difference between the revenue from selling the item and the direct costs of making it. gross profit= revenue- direct costs
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what is the appropriation account?
records where the profit has gone.
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what does it mean if there is a high level of stock left?
showing a poor response to low sales. Production should have been reduced as demand fell
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what should the share dividend be linked to?
how successful the business has been
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what does it mean by zero tax?
the business has not made a profit
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what does it show if the directors have allowed costs to increase at a time when income is falling?
poor management
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what is net profit?
the final profit once interest paid or recieved has been included, before tax.
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when is profit first calculated?
when running costs of the business have been paid.
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what is depriciation?
money that the business has put to the side to pay for any repairs needed.
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who would be interested in looking at a firms profit and loss account?
existing shareholders who might be entitled to a share of the profit, potential shareholders deciding whether to buy a share, employees want to know if the business is making a profit or loss to see if they could get a pay rise or be made redundant
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contiuned....
government who recieve tax from the business and see how much they need to pay.
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Other cards in this set

Card 2

Front

how do you work out gross profit?

Back

the difference between the revenue from selling the item and the direct costs of making it. gross profit= revenue- direct costs

Card 3

Front

what is the appropriation account?

Back

Preview of the front of card 3

Card 4

Front

what does it mean if there is a high level of stock left?

Back

Preview of the front of card 4

Card 5

Front

what should the share dividend be linked to?

Back

Preview of the front of card 5
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