Unit 5 - Burnley Brothers

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
Has anyone else done the Burnley Bros assignment? I have completed the majority of the assignment, P&L, B/S and ledger accounts, I just have a problem with Task 6. It asks why the profit shown in the P & L is different to the fall in their business bank and cash accounts? I dont know the answer, any tips would be greatly received<BR><BR>Julia

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 5 - Burnley Brothers

    It's all to do with the accruals or matching concept.<BR><BR>The P & L shows the sales revenue earned and expenses incurred during the accounting period to which it relates regardless of whether the income from credit sales has actually been received or the expenses incurred have actually been paid at the accounting year end.<BR><BR>The bank and cash accounts only show actual amounts paid and received and do not show the true picture in terms of the profitablility of the business. Neither do they show the non-cash expense of depreciation.

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