Unit 2 Mock Assignment P5 P7 M3 D2
Task 1-P5
The main purpose of the trading account is to know the gross profit/loss of the business. According to the trading profit and loss account for Smiths for the year ended 31st December the gross profit is £186,325.
However the trading account is used to see whether the material costs and direct expenses are covered or not. Material costs means the price of the items used to produce the goods for the sale. Direct Expenses means the expenses are linked to the production to make the goods for a profitable purpose. In the trading, profit and loss account for smiths the material costs are motor expenses which are £9,622 while the direct expenses is Electricity which costs £7,400.
The purpose of the profit and loss account is to enable the manager/owner to tell whether the business is making a loss in terms of revenue. As per the trading, profit and loss account for smiths for the year ended 31st December the net profit is £130,473.
Fixed assets also known as property, plant and equipment are tangible assets held by a business for the production or supply of goods and services. As per the balance sheet for Smiths as at the 1st January the fixed assets equal to £167,300.
Current assets are cash and other resources that are expected to turn into cash or to be used up within one year of the balance sheet date. The current assets for Smiths as at the 1st January are £43,103.
Working Capital is the cash available for the day to day operations of a company. For Smiths according to their balance sheet as at 1st January is £383.
Net Worth is total assets minus total liabilities so it is used when talking about the value of a company. The Net Worth for Smiths according to the balance sheet at the 1st January it is £167,683.
The Gross Profit for smiths according to the Trading Profit and Loss account is £186,325 which is the proportion of money left over from revenues after accounting for the cost of goods sold.
The Net Profit for Smiths according to the Trading Profit
The main purpose of the trading account is to know the gross profit/loss of the business. According to the trading profit and loss account for Smiths for the year ended 31st December the gross profit is £186,325.
However the trading account is used to see whether the material costs and direct expenses are covered or not. Material costs means the price of the items used to produce the goods for the sale. Direct Expenses means the expenses are linked to the production to make the goods for a profitable purpose. In the trading, profit and loss account for smiths the material costs are motor expenses which are £9,622 while the direct expenses is Electricity which costs £7,400.
The purpose of the profit and loss account is to enable the manager/owner to tell whether the business is making a loss in terms of revenue. As per the trading, profit and loss account for smiths for the year ended 31st December the net profit is £130,473.
Fixed assets also known as property, plant and equipment are tangible assets held by a business for the production or supply of goods and services. As per the balance sheet for Smiths as at the 1st January the fixed assets equal to £167,300.
Current assets are cash and other resources that are expected to turn into cash or to be used up within one year of the balance sheet date. The current assets for Smiths as at the 1st January are £43,103.
Working Capital is the cash available for the day to day operations of a company. For Smiths according to their balance sheet as at 1st January is £383.
Net Worth is total assets minus total liabilities so it is used when talking about the value of a company. The Net Worth for Smiths according to the balance sheet at the 1st January it is £167,683.
The Gross Profit for smiths according to the Trading Profit and Loss account is £186,325 which is the proportion of money left over from revenues after accounting for the cost of goods sold.
The Net Profit for Smiths according to the Trading Profit