1. FINAL ACCOUNTS Trading Account – shows Gross Profit Profit and Loss Account – shows Net Profit Balance Sheet – shows what the business owns and owes and how it has been financed.

2. TRADING ACCOUNT £££ Sales -Returns in -Cost of Sales Opening Stock +Purchases - Returns out - Closing Stock Cost of Sales GROSS PROFIT Gross Profit = Sales – Cost of Sales 27,500 1,000 26,500 9,000 15,000 50014,500 3,750 19,750 6,750 23,500

3. PROFIT AND LOSS ACCOUNT ££ Gross Profit + Rent received - Electricity -Stationery -Rates -Interest on loan -Advertising -Insurance -Sundry Expenses -Telephone NET PROFIT Net Profit = Gross Profit - Expenses 6,750 2,000 8,750 510 125 756 159 845 545 124 4003,464 5,286

4. BALANCE SHEET FIXED ASSETS Premises Machinery Motor Van CURRENT ASSETS Cash in hand Cash at bank Stock Debtors CURRRENT LIABILITIES Creditors Working Capital LONG TERM LIABILITIES Capital + Net Profit - Drawings Bank Loan Mortgage 80,000 13,200 8,700 101,900 970 10,050 3,750 1,750 16,520 9,000 7,520 109,420 80,000 5,286 85,286 14,866 70,420 9,000 30,000 109,420

5. BALANCE SHEET Mortgage Bank Loan - Drawings + Net Profit Capital LONG TERM LIABILITIES Working Capital Creditors CURRRENT LIABILITIES Debtors Stock Cash at bank Cash in hand CURRENT ASSETS Motor Van Machinery Premises FIXED ASSETS 80,000 5,286 85,286 14,866 70,420 9,000 30,000 109,420 80,000 13,200 8,700101,900 970 10,050 3,750 1,75016,520 9,000 7,520

6. BREAK EVEN ANALYSIS Break even is the point where: Total costs = total income from sales No profit has been made No loss has been incurred Sales above this point lead to a profit Sales below this point lead to a loss

7. BREAK EVEN POINT - can be calculated using a formula BEP = TOTAL FIXED COSTS SELLING PRICE PER UNIT-VARIABLE COST PER UNIT If fixed costs = £8000, selling price per unit =£12, variable cost per unit = £4 Then 1000 units need to be sold to break even 8000 12 - 4 =1000

8. A break even chart can be used to show break even point Fixed costs Total costs Sales BEP Output/Sales Costs & Income

9. CASH FLOW Cash flow is the flow of money into and out of the business. Poor cash flow means there is not enough cash to meet the day to day business expenses. Cash flow forecasts help firms to anticipate problems APRMAYJUNEJULYAUGSEPT OPENING BALANCE10004000 -1000-6000-2000 TOTAL RECEIPTS CASH IN 15000120005000 1600012000 TOTAL SPENDING CASH OUT 12000 10000 12000 CLOSING BALANCE4000 -1000-6000-20002000