Lesson 14

Topics Covered

• Business Costs• Revenue• Profit• Expenditure• Break Even Analysis• Budgeting• Cash Flow Forecast• Profit & Loss Account• Balance Sheet• Maximising Profits

MULTIPLE-CHOICE

1) Mark sells 2 bags of Haribo at school for £1.50 each. He bough the sweets on special offer from ASDA for £1 each. Has he made a profit or loss?

MULTIPLE-CHOICE

2) A business sells 300 ice creams at £1 each in one week. It costs £450 to buy the ice creams from the manufacturer.

Profit or loss?

MULTIPLE-CHOICE

3) Sales revenue for a business selling sportswear is at an all time high at £2million for the financial year. However they have incurred costs from a flood at £1million, fixed costs are £200k and insurance premiums have increased to £500 for the year. Has the business made a profit or loss?

MULTIPLE-CHOICE

4) In one day, a bakery sells:

200 doughnuts at £0.50 each

It costs them £85 to manufacture the doughnuts and they have to pay the staff at £20 for one day.

Have they made a profit or a loss?

MULTIPLE-CHOICE

1) Mark sells 2 bags of Haribo at school for £1.50 each. He bought the sweets on special offer from ASDA for £1 each. Has he made a profit or loss?

Profit

MULTIPLE-CHOICE

2) A business sells 300 ice creams at £1 each in one week. It costs £450 to buy the ice creams from the manufacturer.

Profit or loss?

Loss

MULTIPLE-CHOICE

3) Sales revenue for a business selling sportswear is at an all time high at £2million for the financial year. However they have incurred costs from a flood at £1million, fixed costs are £200k and insurance premiums have increased to £500 for the year. Has the business made a profit or loss?

Profit

MULTIPLE-CHOICE4) In one day, a bakery sells:

200 doughnuts at £0.50 each

It costs them £85 to manufacture the doughnuts and they have to pay the staff at £20 for one day.

Have they made a profit or a loss?

Loss

UNIT TITLE: Unit 2:Finance for BusinessLESSON TITLE: Profit & Loss Account LEARNING AIM: C

COMPETENCY FOCUS:

Key Skills (L5): you will be able to develop your numeracy skills to calculate financial transactions of a business and to interpret financial data.

Learning ObjectivesBy the end of the lesson, you should be able to…

LO1) Identify the purpose of a profit & loss account (income statement)

LO2) To complete a profit & loss account from information provided

LO3) To analyse financial statements for a small business and suggest appropriate actions that the business can take to succeed

Competence level Descriptor

Autonomous I can delve deeper into my calculations by fully explaining how my calculations explain the financial state of the business and I will evaluate how effective/ineffective their business activities have been for the organisation and make justified recommendations for improvement.

Advanced As below but additionally I can use my calculations to begin to analyse the activities of my focus organisation and recommend strategies for improvement.

Strong As below but additionally I can fully explain what the calculations show and explain the financial state of the business.

Regular I can correctly input data into a P&L Account, calculate totals and then begin to explain what the calculations show.

Guided Through basic calculations, I can input data correctly into a P&L Account.

I can recognise the layout of the P&L Account, input data correctly and explain what the figures show:

Video Clip

http://www.bbc.co.uk/schools/gcsebitesize/business/finance/accountsvid.shtml

What is a Profit & Loss Account

Often used to take to the Bank Manager when wanting to apply for a loan

Sometimes called the ‘income statement’Show profit/losses over a one year period

Quick Quiz

Which 2 of the following are ways of improving a business’ gross profit?

a)Sell the business to a competitor

b)Reduce the business’ costs

c)Reduce the business’ turnover

d)Reduce productivity

e)Reduce business efficiency

f)Increase productivity

Quick Quiz

Which 2 of the following are ways of improving a business’ gross profit?

a)Sell the business to a competitor

b)Reduce the business’ costs

c)Reduce the business’ turnover

d)Reduce productivity

e)Reduce business efficiency

f)Increase productivity

What is a Profit & Loss Account

There are 3 sections to the P&L account:

-Trading Account

-Profit & Loss Account

-Appropriation Account

What is a Profit & Loss Account

You can see from your revision guide what is included in each section.

Profit & Loss Account

Complete task on Sports Warehouse Plc.

Lesson 15

Re-cap on P&L Account

a)What is a P&L Account also known as?

b)What is a P&L Account?

c)What are the 3 section of a P&L Account?

UNIT TITLE: Unit 2:Finance for BusinessLESSON TITLE: Profit & Loss Account LEARNING AIM: C

COMPETENCY FOCUS:

Key Skills (L5): you will be able to develop your numeracy skills to calculate financial transactions of a business and to interpret financial data.

Learning ObjectivesBy the end of the lesson, you should be able to…

LO1) Identify the purpose of a profit & loss account (income statement)

LO2) To complete a profit & loss account from information provided

LO3) To analyse financial statements for a small business and suggest appropriate actions that the business can take to succeed

Competence level Descriptor

Autonomous I can delve deeper into my calculations by fully explaining how my calculations explain the financial state of the business and I will evaluate how effective/ineffective their business activities have been for the organisation and make justified recommendations for improvement.

Advanced As below but additionally I can use my calculations to begin to analyse the activities of my focus organisation and recommend strategies for improvement.

Strong As below but additionally I can fully explain what the calculations show and explain the financial state of the business.

Regular I can correctly input data into a P&L Account, calculate totals and then begin to explain what the calculations show.

Guided Through basic calculations, I can input data correctly into a P&L Account.

I can recognise the layout of the P&L Account, input data correctly and explain what the figures show:

TASK 1

Complete Workbook.

[30mins]

TASK 2

You have 20mins to revise theory on Balance Sheets and Profit & Loss Account.

You will now sit a test!

[30mins]

TASK 3

Use the revision guidance notes to produce your own revision notes ready for the exam!

[30mins]