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Money Bag

Unit 3 - Finance & accounts

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Chart Increasing

Unit 1 - Introduction To Business Management

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Briefcase

Unit 2 - Human Resource Management

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Direct Hit

Unit 4 - Marketing

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Factory

Unit 5 - Operations management

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Bar-Chart

Unit 6 - Assessment

<ul>
	<li>📅 Duration: It&#39;s like a diary of a business&#39;s money matters over a period of time.</li>
	<li>🔥 Key Point: Shows if you&#39;re rolling in cash or crying in losses.</li>
	<li>🍰 Parts
	<ul>
		<li>Trading Account</li>
		<li>Profit and Loss Account</li>
		<li>Appropriation Account</li>
	</ul>
	</li>
</ul>

<ul>
	<li>
	Shows the difference between what you earned (sales revenue) and what it cost you.
	</li>
	<li>
	Formula Fun! 🧮

	<ul>
		<li>Gross profit = sales revenue - cost of sales.</li>
		<li>Cost of sales = starting stock + purchases - ending stock.</li>
	</ul>

	For instance, imagine you began with 500 chocolate bars. You bought 800 more, but by the end, you had 200 left. Your cost of sales: COGS = $500 + $800 - $200 = $1,100 (It&#39;s like you ate or sold 1,100 chocolate bars 🍫)

	Now, say you sold 400 of them for $10 each. Gross profit? Gross profit = $4,000 - $1,100 = $2,900. (That&#39;s a lot of chocolates!)
	</li>
</ul>

<ul>
	<li>
	Highlights profit before all those extra adult things like tax and interest.
	</li>
	<li>
	Extra adult things

	<ul>
		<li>Overheads (AKA indirect costs) like ads, office rent, etc.</li>
		<li>Interest on loans</li>
		<li>Company tax</li>
	</ul>
	</li>
</ul>

Formula Time!

<ul>
	<li>Profit before interest &amp; tax = Gross profit - expenses</li>
	<li>Profit before tax = Above profit - interest</li>
	<li>Profit for the period = Above profit - company tax</li>
</ul>

<ul>
	<li>
	How profits are shared: Dividends (💰 for shareholders) or Retained Profit (business savings).
	</li>
	<li>
	Key Formula: Retained Profit = Profit for the period - dividends.

	FYI: For non-profit groups, the term is &quot;surplus&quot; and not &quot;profit&quot;. They don&#39;t pay company tax or dividends. The surplus is like their savings.
	</li>
</ul>

<ul>
	<li>Snapshot 📸: Financial selfie of a business at a particular moment.</li>
	<li>Basically: What a business owns should equal what it owes + how it&#39;s funded.</li>
	<li>Main ingredients
	<ul>
		<li>Assets: What you own.</li>
		<li>Liabilities: What you owe.</li>
		<li>Equity: How assets were financed (like from shareholders).
		Real-world Examples 🌍
		</li>
		<li>Imagine your closet as the business. Your clothes are assets, the money you owe mom for buying them is liabilities, and your allowance (or birthday money) is equity.</li>
		<li>Profit &amp; Loss is like checking if you have more candy at the end of Halloween than what you started with. Trading account is finding out how much candy you got, and Appropriation is deciding how much to eat now and how much to save for later.</li>
		<li>
		Remember kiddo, finances are just like your favorite games. Once you know the rules, it&#39;s all about playing smart and having fun! 🚀🎮📚
		</li>
	</ul>
	</li>
</ul>

Unlock Business Success: Profit, Loss & Balance Sheet Explained

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Standard Level

Business Management SL

Unit 3 - Finance & accounts

Unlock Business Success: Profit, Loss & Balance Sheet Explained

Table of content

Profit & loss account (AKA income statement)

The trading account 🛒

The profit & loss Account 💸

Unlock the Full Content!

Unit 3 - Finance & accounts

Unlock Business Success: Profit, Loss & Balance Sheet Explained

Table of content

Profit & loss account (AKA income statement)

The trading account 🛒

The profit & loss Account 💸

Unlock the Full Content!