4.3 Profit and loss account

• Economie
• Middelbare school
• vmbo lwoo, havo, vwo
• Leerjaar 3

Chapter 4.3

Revenue and costs

Content of the test

Chapter 4.1	Setting up a business
Chapter 4.2	Assets and debts
Chapter 4.3	Profit and loss

Read

Page 122

Profit and loss account

Total amount on the left side needs to be equal to the total amount on the right side

Assets - debts = equity

€ 900 - € 400 = € 500 -->value of the company

Assets			Debts
Inventory	€ 500	Equity	€ 500
Goods	€ 300	Bankloan	€ 300
Cash	€ 100	Creditors	€ 100
Total	€ 900	Total	€ 900

Debit side

Credit side

Investing in fixed assets--> not a cost item

Buying a car:

Total amount of assets doesn't change

So equity doesn't change

Assets			Debts
Car	+ € 15,000	Equity	+ € 0
Cash	- € 15,000

Example of car related costs

You have to pay insurance premium € 25 per month by bank.

You spend € 25 and do not get a asset in return.

Total amout of assets decreases. Equity decreases as well.

Assets			Debts
Bank	- € 25	Equity	- € 25

Repayment of debt  --> not a cost item

Jimmy has a bank loan of € 300. Repayment per year is € 100 by bank

Equity doesn't change. Assets decreases with € 100 and debts also decreases with € 100

Assets			Debts
Bank	- € 100	Bank loan	- € 100

Exercise 2 on page 123

Wich word has been left out in the text:

A Increases

B Decreases

Exercise 2 on page 123

Wich word has been left out in the text:

A Increases

B Decreases

And F:

Increases/ decreases/ doesn't change