2.30 Jane will be able to withdraw the £12,000 representing the cash that she put into the business in the previous December, and she will also be able to withdraw the profits of £8,000 that she has made. She therefore has cash of £20,000 to invest in her new limited company, Jane’s Windsurfing Limited. 2.31 The above example has shown some simplified versions of the three primary statements in a set of financial statements, namely the profit and loss account, the balance sheet and the cash flow statement. 2.32 In addition to the three primary statements described above, the main other components of financial statements are a specialist statement called a Statement of Total Recognised Gains and Losses, (known as a STRGL, and pronounced “struggle”) and the notes to the financial statements. The notes to the financial statements contain further detailed disclosures in respect of some of the figures given in the primary statements.
3Jane’s Windsurfing Limited
3.1 Jane registers her new company for VAT, subscribes for £20,000 in share capital, takes on two members of staff and takes a lease of somewhat larger premises. She negotiates better terms with suppliers and sells a wider range of equipment. The profit and loss account for the first year of trading of Jane’s Windsurfing Limited is summarised below:
Jane’s Windsurfing Limited Profit and Loss Account
Sales
457,000 (274,000) _______ 183,000 (77,700) (39,300) ______
Cost of Sales
Gross Profit
Payroll costs
Other administrative expenses
Operating profit and profit before taxation
66,000
Taxation: Corporation tax Taxation: Deferred tax
(10,600) (3,300) ______
Profit after taxation
52,100
10
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