Year End Accounts Profit and Loss Sheet

Question 1

What does it do?

Answer 1

. Calculates if business made a profit or a loss in the financial year
. Captures all income created and deducts all expenses paid or incurred
. INCOME less EXPENSES equals PROFIT

Question 2

Sole Practitioner Profit and Loss Sheet

Answer 2

Profit and Loss Account for X, for year ending 30/9/20
INCOME
Profit Costs £20000
Income A £10000
Gross Profit £30000

LESS EXPENSES
Expense A                £500
Expense B                £100
Expense C                £200
                                                      (£ 800)

NET PROFIT £29,200

Question 3

Sole practitioner

Answer 3

Net profit recorded at bottom of P&L Account

Added to Capital Section of Balance Sheet

Question 4

Partnership: Appropriation Account

Answer 4

. Additional section after Net Profit figure
. Sets out how the profit is being split, following the terms of the Partnership Agreement
. Shows entitlement to salary, interest on capital, and profit share after salary and interest has been paid

Question 5

Registered Company: Appropriation Account

Answer 5

. Additional section after Net Profit figure
.Registered company has to pay corporation tax on profit
. Shows how profit is being distributed to pay tax, dividends to shareholders, and amount of profit retained as the company’s reserves.

Question 6

Partnership Profit and Loss Sheet

Answer 6

Profit and Loss Account for X, for year ending 30/9/20
INCOME
Profit Costs £20000
Income A £10000
Gross Profit £30000

LESS EXPENSES
Expense A                £500
Expense B                £100
Expense C                £200
                                                      (£ 800)

NET PROFIT £29,200
APPROPRIATION ACCOUNT

                              PARTNER A (1:3)  PARTNER B  (2:3) INT ON CAPITAL     £200                     £100 SALARY                    £10,000                £15,000 PROFIT SHARE        £1,300                   £2,600  TOTALS                    £11,500                  £17,700

Question 7

Company Profit and Loss Sheet

Answer 7

Profit and Loss Account for X, for year ending 30/9/20
INCOME
Profit Costs £20000
Income A £10000
Gross Profit £30000

LESS EXPENSES
Expense A                £500
Expense B                £100
Expense C                £200
                                                      (£ 800)

PROFIT BEFORE TAXATION £29,200
APPROPRIATIONS
Less Taxation (£5,000)
Profit after Taxation £24,200
Less Dividend for Shareholder (10,000)
Reserves (retained profit) £14,200