Key Points

1. The Balance Sheet is a picture of the Business at a given point in time

2. The Profit and Loss Account summarises the revenues and costs

3. The Profit and Loss Account is just one of the Balance Sheet accounts

4. If all transactions were in cash, the Balance Sheet would just be

Bank Account on one ‘side’ and
Owner(s) Capital on the other

5. The other Balance Sheet Accounts are just the timing differences between Profits and Cash!

6. Therefore PROFIT = LONG TERM CASH!

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