Remember these'

1
Remember these.
Sales
Net profit
Overheads (animation)
Cost of sales
Gross Profit
2
Profit

• What does it mean? One sentence
• 2 things that affect how much you make?

3
What where the items on the board at the start?

• Overheads
• Sales
• Cost of Sales
• Net Profit
• Gross Profit
• But what do they all mean?

4
The structure of a profit and loss account 1

• Top part is concerned with gross profit, e.g.
• Sales 300,000
• Cost of sales 100,000
• Gross profit 200,000

Note cost of sales is the same as cost of
purchases. It is deducted from sales.
5
The structure of a profit and loss accounts 2

• Second part is concerned with net profit, i.e.
  gross profit minus expenses.
• Gross profit 200,000
• Expenses
• Salaries 55,000
• Rent 10,000
• Other 5,000
• Total expenses 70,000
• Net profit 130,000

6
Your turn!
90,000
7
Profit and Loss Costs

• Revenue (Money Made)
• Smoothies 50p each
• Costs per smoothie
• Yoghurt 12p
• Fruit 10p
• Orange 5p
• Electricity 3p
• Telephone 2p
• Labour 10p
• Calculate a profit and loss account if I make
  50

REMEMBER Difference between cost of sale and
overhead/expenses!
8
Profit and Loss Forecasting

• Using the following financial information for
  Arfur Daley Plc. construct a PL account using
  the appropriate format.

9
Arfur Daleys Car Showroom

• Arfur Daley setup a business selling second hand
  cars. He forecasts his figures for next year as
  follows
• Sales 500,000
• Cost of painting/servicing cars 20,000
• Cost of buying cars 350,000
• Rent of Showroom 9,000
• Rates 4,800
• Assistants wages 5,000
• Other showroom expenses 7,000
• Tax 34,000
• Dividends 25,000