Accountancy question on profit and loss ?
Discussion
Hi - please can anyone help me on this? I am struggling with part of my MBA study relating to a particular exercise in reading balance sheets and profit and loss accounts.
Q. I have a draft P&L and a draft balance sheet in front of me. Under 'Capital & reserves' on the balance sheet there is a line called 'Profit and loss account'. I have accounts for a number of other companies (which are not exercises - so I know they should be correct).
Does the this 'P&L' line come from somewhere in the Profit and Loss account i.e. a derived figure, or from somewhere else. I just cannot see how this figure is arrived at from any of the information in front of me - so maybe it isn't?
Its driving me mad and I just cannot got on with the exercise set until I know the answer to this. I have set up an Excel spreadseet through which I have to change various numbers to see how it changes the picture. But if I don't know how the 'P&L' line in the balance sheet is pure data or relates back to the 'P&L' account, then I'm snookered.
Sorry to have to ask this here, I'm obviously not getting the support I need at Uni despite the extortionate course fees I am having to pay!
TIA
Q. I have a draft P&L and a draft balance sheet in front of me. Under 'Capital & reserves' on the balance sheet there is a line called 'Profit and loss account'. I have accounts for a number of other companies (which are not exercises - so I know they should be correct).
Does the this 'P&L' line come from somewhere in the Profit and Loss account i.e. a derived figure, or from somewhere else. I just cannot see how this figure is arrived at from any of the information in front of me - so maybe it isn't?
Its driving me mad and I just cannot got on with the exercise set until I know the answer to this. I have set up an Excel spreadseet through which I have to change various numbers to see how it changes the picture. But if I don't know how the 'P&L' line in the balance sheet is pure data or relates back to the 'P&L' account, then I'm snookered.
Sorry to have to ask this here, I'm obviously not getting the support I need at Uni despite the extortionate course fees I am having to pay!
TIA
The "Capital Reserve" section of the Balance Sheet is usually made up of:
This Year's Net Profit and Loss amount,
The accumulated Profits and Losses brought forward
from earlier years.
The owners' equity in the business - Share Capital in the case of a Limited Company, Capital Accounts in the case of Sole Traderships or Partnerships.
Other types of headings and figures shown in this section of the Balance Sheet would be "Revaluation Reserves" etc.
If you have comparative figuers available you should be able to see the Accumulated Profit and Loss account figures being carried forward from the previous accounting period.
This Year's Net Profit and Loss amount,
The accumulated Profits and Losses brought forward
from earlier years.
The owners' equity in the business - Share Capital in the case of a Limited Company, Capital Accounts in the case of Sole Traderships or Partnerships.
Other types of headings and figures shown in this section of the Balance Sheet would be "Revaluation Reserves" etc.
If you have comparative figuers available you should be able to see the Accumulated Profit and Loss account figures being carried forward from the previous accounting period.
Eric, you are a gem - many thanks for that. It seems so simple, but I got a real thinking block doing this exercise.
So, this years 'P&L' line = last years' 'P&L' line plus the retained profit for this year. It all adds up now, so I'm very happy!
Only 2 weeks into an MBA and I'm getting stuck already.
Many thanks for your kind response,
Bryan
So, this years 'P&L' line = last years' 'P&L' line plus the retained profit for this year. It all adds up now, so I'm very happy!
Only 2 weeks into an MBA and I'm getting stuck already.
Many thanks for your kind response,
Bryan
TUS 373 said:
where you taking your course?
Alan, I'm at Bradford University School of Management - Emm Lane (seeing as you are only in Leeds !).
Really starting to get difficult through a variety of complications - and at a basic cost of £16,500 !
thats a lot!!!
What you staying in, a manshion?
Im not at leeds anymore, at sheffield now, doing an engineering related course.
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