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BTEC Level 3 Business Unit 2- Business Resources P5
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- The University Of Birmingham (UBir)
BTEC Level 3 Business Unit 2- Business Resources P5
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Jahed AhmedBMC000010360
P5- For this task I will interpret the contents of a trading and
profit and loss account and a balance sheet for a selected
company which is Domestic Dog Homes.
A trading and profit and loss account measures the revenue
sources of a business and a business’s expenses over a period
of time. The sales are stated on this which shows the gross
profit. Sales returns are when a product is returned back after
it has been purchased because it was faulty or unwanted. Net
sales is the total number of sales that is generated until the
end of the year, this is done by the sales figure minus the sales
return figure. The net sales for Domestic Dog Homes are
£244,600.
The cost of sales is the amount that includes the purchase
price with the purchase returns and the opening and closing
stock. To get the gross profit figure you have to add the
opening stock to the purchases then minus the purchase
returns and the closing stock. To get the gross profit:
Net sales – ((Opening stock + Purchases) – (Purchase returns +
closing stock))
The gross profit for Domestic Dog Homes is £102,250.
Purchases are the products that a company buys from retailers
and the cost price is then recorded into the trading and profit
and loss account as a total of all purchases. Purchase returns
are the products returned to the retailer from where it was
bought. Closing stock is the amount of purchases left over at
the end of the year. Opening stock is the new stock that is
bought at the beginning of the year.
Then there are the overheads which are things such as money
going out or expenses. You can have expenses such as
salaries, rent and rates, electric and gas expenses. To complete
the trading and profit and loss account and obtain the net
profit information, you will have to minus the overheads from
the gross profit and then the trading and profit and loss
account is complete. The profit can sometimes be negative.
The overheads make the net profit decrease from the gross
profit so the more overheads that Domestic Dog Homes then
the smaller their net profit will be. The overheads are £59,400
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