Profit & Loss Account/Balance Sheet

steph-hibaldstow

I have started the Intermediate Level after completing the Foundation which seemed easy compared to this.

I seem to be having a problem learning the order for the Profit & Loss account as well as the balance sheet after I have completed the trial balance. Every time I look in the text book there seems to be several different layouts is there a simple way of remembering this.

If anyone can help it would be appreciated.

carla030698

Iv got the exam on Wednesday, and im having the same problem, so if anyones got any advice it will be greatly appreciated! :001_unsure:

Lizzim

The way I remember is Profit & Loss Account uses the following equation - Income - Expenses = Profit/Loss

Balance Sheet is Assets - Liabilities = Capital

Obviously the difficult part is identifying which items are which so I find it can help to write next to each item what it is - rather than just trying to transfer the amounts directly by using the ETB.

Another thing I like to do - write the headings/items on one of the workings pages and then check everything is included before writing up the P&L/BS so as not to miss anything out.

haychie

This is what i do and i find it helps lots!

Profit and loss i remeber as PIE

P for Profit
I for Income and
E for Expenses expenses are always DR so income are CR

Balance Sheet i remeber BAL as in short for Balance
B for Balance sheet
A for Assets
L for Liabilities Liabilities are always a CR so assets are DR

Wheni beging my ETB i write at the top of the PL and BS columns

P I E and B A L
cr dr dr cr

if you can only remeber one thing like i can!! I always remember that Expense is always a DR i then know when i write PIE that cr is first then on the BAL it's opposite way around so DR is first.

Hope this helps you guys! really works for me!

i'm struggling on mark up and sales margin of say 40% i don't understand it at all! in fact i can't remember doing it! Any help? think i will post new thread for it :001_smile:

steph-hibaldstow

Thanks for that I will try it see how I go.