AboutLeo Lingham Expertise In Managing a business, I can cover all aspects of running
a business--business planning, business development, business auditing, business communication, operation management, human
resources management , training, etc.
Experience 18 years of working management experience covering such areas
as business planning, business development, strategic planning,
marketing, management services, personnel administration.
PLUS
24 years of management consulting which includes business planning, strategic planning, marketing, product management, training, business coaching etc.
Question hi leo
what is the difference between balance sheet and the profit and loss account.
Answer MOONKESS,
HERE IS SOME USEFUL MATERIAL.
REGARDS
LEO LINGHAM
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BALANCE SHEET
In financial accounting, a balance sheet or statement of financial position is a summary of the value of all assets, liabilities and Ownership equity for an organization or individual on a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot" of a company's financial condition on a given date.Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time, instead of a period of time.
A company balance sheet has three parts: assets, liabilities and shareholders' equity. The main categories of assets are usually listed first and are followed by the liabilities. The difference between the assets and the liabilities is known as the net assets or the net worth of the company. According to the accounting equation, net worth must equal assets minus liabilities.
Records of the values of each account or line in the balance sheet are usually maintained using a system of accounting known as the double-entry bookkeeping system.
SAMPLE BALANCE SHEET
Balance Sheet of XYZ, Ltd. as of 31 December 2006
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable (debtors)
Inventories
Prepaid Expenses
Investments held for trading
Other current assets
Fixed Assets (Non-Current Assets)
Property, plant and equipment
Less : Accumulated Depreciation
Goodwill
Other intangible fixed assets
Investments in associates
Deferred tax assets
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LIABILITIES and EQUITY
Creditors: amounts falling due within one year (Current Liabilities)
Accounts payable
Current income tax liabilities
Current portion of bank loans payable
Short-term provisions
Other current liabilities
Creditors: amounts falling due after more than one year (Long-Term Liabilities)
Bank loans
Issued debt securities
Deferred tax liability
Provisions
Minority interest
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Equity
Share capital
Capital reserves
Revaluation reserve
Translation reserve
Retained profit
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PROFIT AND LOSS STATEMENT [ P& L STATEMENT ]
The Profit and Loss (P&L) Statement is also known as the Income Statement. It shows how well a company buys and sells inventory (or services) to make a profit. A firm must create a profit in order to survive and remain solvent. Careful analysis of the components of a P&L is important in determining the cash flow available to repay existing debt, finance additional debt (for business expansion), or to reinvest in the company.
Just as the Balance Sheet is a snapshot of the financial condition of a company at a certain point in time, the Profit and Loss statement shows the results of financial operations over a period of time. The amount of time could be a month, a quarter of a year, a half year, or a year.
SAMPLE P/L STATEMENT FOR THE YEAR 1 APRIL TO 30 MARCH
Sales
- MINUS Cost of Goods Sold (variable)
= Gross Profit
- MINUS Selling & Gen. Admin. (fixed/period)
= Operating Profit
- Officer Salaries (discretionary)
- Interest (discretionary)
- Depreciation (discretionary)
- Rent (discretionary)
+/- Other Income/Expenses
= Earnings Before Tax
- Taxes
= Profit After Tax
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