Profit and Loss Statement and Balance Sheet - what do they mean?

Profit and Loss Statement (PL)

PL shows how much profit a business has made

Income

-sales
-bank interest

less Expenses

-purchases/materials
-bank fees
-car expenses
-rent
-wages
-super etc

equals Profit

Balance Sheet (BS)

The BS shows the businesses assets and liabilities (who it owes $ to)

Assets

-bank
-stock
-accounts receivable
-equipment
-cars

Liabilities

-credit card
-accounts payable
-ATO BAS debt
-finance
-loan from director

Tax

Tax is payable on the profits (after tax adjustments*)

-Sole Traders pay tax on profits* plus other income eg wages less deductions eg work related expenses at individual marginal tax rates

-Companies pay tax on profits* at company tax rates

-Trusts normally distribute the profits to beneficiaries - Individual beneficiaries pay tax on profits* at individual marginal tax rates. Company beneficiaries pay tax on profits* at company tax rates