Level 2 Business and Economics: Simple Business Accounting

Introduction

If you have no idea of what you have spent or what you have received, it is difficult to know how the business is doing - are you surviving? Are you making a profit? Are you making a loss? With these last two points, how much of a profit or a loss are you making?

You might need your calculator for this resource but there is nothing scarier to do than a bit of adding, subtracting, multiplying and dividing! Copyright: Johann Snymann, from stock.xchng.

In this resource, we will look at some simple business accounting methods. This will include a look at balance sheets, profit and loss accounts, and some simple ways of getting an idea about how your business is performing. This will include profit margins, mark up and return on capital employed.

Many students struggle with this area partly because it uses numbers and partly because it is not easy remembering all the formulas needed. We will try to make it as simple as possible without losing the essence of the topic. Much of the secret of success here is confidence: confidence in using accounts, of doing the calculations and knowing what the resulting calculation tells you.

Pages in the Series

• The Scenario
• Your Performance
• Terminology
• The Balance Sheet
• Profit and Loss Accounts and Balance Sheets
• Final Exercise
• Extension Activity