The Cash Flow Statement and the Profit and Loss Account

Abstract

When you have finished working through this chapter you should be able to

• Identify a number of important objectives in a modern business organisation

• Discuss the relationship between financial and marketing objectives

• Broadly define the concept of profit

• Appreciate the difference between profit and cash FLOW

• Explain the matching concept

• Define, contrast and illustrate with examples the terms sales revenue and receipt

• Define, contrast and illustrate with examples the terms expense and payment

• Explain and calculate gross profit

• Explain and calculate trading profit and RETAINED PROFIT

• Using the standardised layout provided, draw up a CASH flow statement in the context of a simple example

• Using the standardised layout provided, draw up a profit AND LOSS ACCOUNT in the context of a simple example