Final accounts

final accounts

comprise the profit and loss account the balance sheet and cash flow statement

Profit loss account

shows the net profit after all costs have been deducted from revenue

sales revenue

money a business earns from selling its goods and services

cost of goods sold (COGS)

direct cost of production

included raw materials and packaging

formula for cost of goods sold

open stock + purchase = closed stock

Gross profit

amount of profit from trading, calculated by taking away the value of COGS from sales revenue

expenses

indirect costs of production eg, rent and insurance

Net profit before interest and tax

value of profit before deducting interest repayments on loans

Net profit after interest and tax

actual amount of profit the business has at its disposal after all costs are deducted

dividends

payment that the company pays to its shareholders from its net profit after interest and tax

retained profit

amount of net profit remaining after all costs are paid and shareholders have been compensated

formula for retained profit

Net profit after interest and tax - dividends

formula for equity

total assets - total liabilities

formula for net profit

Gross profit - expenses

formula for expenses

Net profit - gross profit

formula for gross profit

sales revenue - cost of goods sold

fixed assets

long term assessed used to produce goods and services

current assets

short term liquid assets intended to be used up within the year

current liabilities

short term debts that need to be repaid within 12 months

net assets

overall value of a firms assets after all liabilities are accounted for