Forum

topBanner
First Previous - Page 1 of 1 - Next Last

Vertical presentation of trading P&L & balance sheets

  • 62 posts
  • # 78178

Hi all,

I'm currently studying L2 manual and have hit a brick wall with final accounts.

While I understand the logic behind trading, P&L & balance sheets when presented in horizontal format, I am somewhat confused about the logic of vertical presentation (the more preferred modern method). I can follow the logic of the calculations to reach the total figures, but I cannot understand the use of three columns and what dictates where the figures sit.

Perhaps this is more simple than I realise, but hope that someone may be able to assist!!

Appreciate the help

A 
Debsie
  • Fellow PM.Dip
  • Practice Licence
  • 336 posts
  • # 78218

The logic of the columns is quite easy ... they are a method of demonstrating additions and subtraction.  In the example below your income items A, B and C  shown in the left hand column add up to D, and D is shown in the middle column.   Your expense items E, F, and G shown in the left hand column add up to H shown in the middle column.  Your gross profit is D - H and the answer I is shown in the right hand column.

Income
A     5
B     5
C     5     __
D            10

Expense
E     2
F      2
G     2      __
H             6

Gross profit
                   __
I                  4

If you remember that the total of a column is always on the column to the right you shouldn't go too wrong.

Hope this helps,

Edited at 11 Jan 2012 03:25 PM GMT

Edited at 11 Jan 2012 03:27 PM GMT

  • Debbie
    www.beckcottage.com


  • Quote
  • 62 posts
  • # 78279

Wonderful, thank you Debsie. I suspected it might be quite simple and in fact was overcomplicating it.

Thank you very much, appreciate the help

A Smile
Brian @ Ideal Schools
  • Companion
  • Accredited Training Provider IS
  • 435 posts
  • # 78287

Debsiesaid:

“The logic of the columns is quite easy ... they are a method of demonstrating additions and subtraction.  In the example below your income items A, B and C  shown in the left hand column add up to D, and D is shown in the middle column.   Your expense items E, F, and G shown in the left hand column add up to H shown in the middle column.  Your gross profit is D - H and the answer I is shown in the right hand column.

Income
A     5
B     5
C     5     __
D            10

Expense
E     2
F      2
G     2      __
H             6

Gross profit
                   __
I                  4

If you remember that the total of a column is always on the column to the right you shouldn't go too wrong.

Hope this helps,

Edited at 11 Jan 2012 03:25 PM GMT

Edited at 11 Jan 2012 03:27 PM GMT”
Hi Debbie,

A great explaination, but you need to be careful with your arithmetic. Hehe Laughing

Kind regards
Debsie
  • Fellow PM.Dip
  • Practice Licence
  • 336 posts
  • # 78291

Brian

You're absolutely right - am I in the  right profession here, if I can't add up simple numbers correctly?  It serves me right for trying to answer the forum question in a rush!

I hadn't even noticed.  

Kind regards
 

  • Debbie
    www.beckcottage.com


  • Quote
Brian @ Ideal Schools
  • Companion
  • Accredited Training Provider IS
  • 435 posts
  • # 78299

Hi Debbie,

It was only an example, I suppose. You are excused!!

Have a great weekend.

regards Smile
First Previous - Page 1 of 1 - Next Last
bottomBanner
loading