COM 10 JSaad
Maintaining Records
Glossary of Terms
Revenue
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Expenses
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Gross Profit/Loss
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Net Profit / Loss
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Assets
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Current Assets
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Non- Current Assets
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Liabilities
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Current Liabilities
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Non-Current Liabilities
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Owner’s equity
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Liquidity
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COM 10 JSaad
Revenue Statement
To measure the success of a particular business, a financial report called a revenue statement is drawn up
with the aim of working out the net profit of the business.
How?
1. Record the revenue
2. Record the expenses. Expenses include:
 Wages
 Electricity
 Rent
 Advertising
3. Calculate the gross profit or gross loss (revenue – cost of goods sold)
4. Calculate the net profit loss (gross profit – operating expenses)
Figures
Cash Sales – 215,000
Rent- 20,000
Cost of goods sold- 90,000
Electricity – 5,500
Wages – 38,000
Sam’s Soccer Boots
Revenue statement for the year ending 30 June 2012
$
Revenue
Cash Sales
Less cost of goods sold
Gross Profit
Less Expenses
Wages
Rent
Electricity
Net Profit
Would you judge this business as successful or not successful? _________________________
$
COM 10 JSaad
Balance Statement
A balance sheet is used to determine the financial position of a business. It records three different sets of accounts –
value of assets, value of liabilities and owner’s equity. The aim is to balance the liabilities and the assets.
How?
1- Calculate the value of Assets
a) Current assets. These include:
 Cash at bank
 Stock at hand
b) Non-current assets. These include:
 Equipment
 Motor Vehicle
 Glasses and cutlery
2- Calculate the value of the liabilities
a) Current liabilities
3- Calculate the owner’s equity (total assets – total liabilities)
Figures
Cash at bank – 68,000
Accounts Payable- 35,000
Stock on hand- 22,300
Bank Loan- 55,000
Equipment- 58,000
net profit retained – 61,500
Motor Vehicle- 37,000
Capital – 46,300
Shelves – 12,500
Sam’s Soccer Boots
Balance sheet as at 30 June 2012
Assets
Current Assets
Cash at Bank
$
$
Liabilities
Current
Liabilities
Accounts
Payable
$
Stock on hand
Non-current
assets
Equipment
Motor Vehicle
Shelves
Total Assets
Non- current
liabilities
Bank Loan
Owner’s
equity
Net Profit
retained
Capital
Total liabilities and owner’s
equity
Does this balance sheet show a balance between assets and liabilities?
___________________
$
COM 10 JSaad
Cash Flow Statement
A cash flow statement indicates the movement of cash receipts and cash payments within a business. By regularly
comparing the totals of receipts and payments, a business is able to calculate its surplus or deficit of cash. This is an
important indicator of a business’s liquidity.
How?
1.
2.
3.
4.
Calculate the total cash inflows
Calculate the total cash outflows
Calculate the Net cash flow (Total Cash Inflow minus Total Cash Outflow)
Calculate the Closing Cash Balance (Net Cash Flow + Opening Cash Balance)
Figures
Net Operating Activities- 75,300
Wages – 38,000
Borrowed Funds- 55,000
Rent – 20,000
Opening Cash Balance – 11,000
Electricity- 5,500
Sam’s Soccer Boots
Cash flow statement for the year ending 30 June 2012
$
$
Cash Inflows
Net Operating Activities
Borrowed Funds
Total Cash Inflows
Cash Outflows
Wages
Rent
Electricity
Total Cash Outflows
Net cash flow (TCI-TCO)
Opening Cash Balance
Closing Cash Balance
Will this business owner be able to pay its debts on time, if the debt is an amount of $25,000? ___________
COM 10 JSaad