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Final Accounts Statement 1 - Coggle Diagram
Final Accounts Statement 1
Purpose of Final Accounts-
Shows financial position of a business
Helps assess profitability
Provides information to stakeholders
Section of Statement 1- Trading Account (Calculates Gross Profit)
Profit & Loss Account (Calculates Net Profit)
Trading Accounts Components-
Sales Revenue (Total sales made)
Less: Sales Returns (Returned goods)
Net Sales
Profit and Loss account components-
Gross Profit (from Trading Account)
Less: Expenses
Wages & Salaries
Rent & Rates
Electricity
Insurance
Depreciation
Net Profit (Gross Profit - Total Expenses)
Less Cost of Sales-
Opening Stock
Plus: Purchases
Less: Purchases Returns
Carriage Inwards
Less: Closing Stock
Gross Profit (Net Sales - Cost of Sales)
Key terms-
Gross Profit vs. Net Profit
Revenue vs. Expenses
Depreciation (Reduction in asset value)