To: Clair Catherall
From: Mohammed Uzair
Date: 12/10/15
Subject: Income statement & Balance Sheet for Curry Lounge
A Trading, Profit and Loss account (Income Statement) can be defined as an account that highlights
a business’s financial performance over a given period of 1 year which includes the sales revenue,
Cost of sales, Gross profit, expenses and Net profit of the organisation or business. The purpose of
the Trading, Profit, and Loss account is to show the business whether or not it has made a profit or
made a loss over that 1 year period thus giving a better insight to the business owners to see
whether the business venture is successful or not and if it’s worthwhile for them to trade. If an
owner sees that he/she are making a huge loss then they may decide to stop trading as the business
venture will be deemed unsuccessful as the business will be losing a lot of money due to making a
loss.
Turnover can be defined as the amount of revenue or money generated from sales by a business or
organisation over a period of 1 year. The turnover figure for The Curry Lounge in 2014 was
£2175,000 and for 2015 the figure was £3300,000; the difference between the two years accounts
for the Curry Lounge is £1125, 000. There are many reasons why there is a difference of £1125,000
between the two figures for each year; one such reason may be that in the first year of 2014 the
Curry Lounge may have less customers as it had just introduced itself and may have been focusing
on another aspect of the business which was to get through the first year. In the second year the
business got a higher turnover because it had been established for 1 year in the location thus people
from the area were well known and familiarised with the restaurant and ate there.
Opening stock can be defined as the amount of stock that the business has at the beginning of the
financial year. Purchases can be defined as the amount of goods or stock that have been bought by
the business. Closing Stock can be defined as the amount of stock a business has at the end of the
financial year. Cost of Sales can be defined as the direct costs incurred by the business when
producing the goods that they sell; in order to calculate the costs of sales you have to carry out the
following formula which is opening stock + ( purchases & expenses ) – Closing stock which give the
business its cost of sales. The cost of sales figure for The Curry Lounge in 2014 was £750,000 and for
2015 the figure was £982,500; the difference between the two years accounts for the Curry Lounge
is £232,500. There are many reasons why there is a difference of £232,500 between the two figures
for each year; one such reason may be that in the first year of 2014 the cost of producing their
products or buying their product would be cheaper so products like meat and vegetables may have
been cheaper to buy in the first year. The reason for the increased cost of sales in the second year
may be because the cost of these products i.e. meat or veg may have increased this may be due to
many reasons; one being that there may have been an increase in demand for the meat wanted by
the business thus as demand increases the price of the product also increases. The reason for this is
that the business was booming and it needed to buy more stock to make more meals.
Gross Profit can be defined as the profit after deducting the cost of goods sold from the business
total revenue of the financial year; in order to calculate the gross profit you have to carry out the
following formula which is Total Revenue – Cost of goods Sold which give the business its Gross Profit
figure. The gross profit figure for The Curry Lounge in 2014 was £1425,000 and for 2015 the figure
was £2317,500; the difference between the two years accounts for the Curry Lounge is £892,500.
These figures show that the Curry Lounges performance was better in 2015 where it made an extra
£892,500 compared to the figure that the restaurant got in 2014 which was £1425,500. It clearly
shows the business did well and may have had more customers in the second year; this may be due
to many reasons; one such reason may be that a lot of customers’ went to the restaurant because
they may have been cheaper than other local restaurants or it may be due to the food they give
From: Mohammed Uzair
Date: 12/10/15
Subject: Income statement & Balance Sheet for Curry Lounge
A Trading, Profit and Loss account (Income Statement) can be defined as an account that highlights
a business’s financial performance over a given period of 1 year which includes the sales revenue,
Cost of sales, Gross profit, expenses and Net profit of the organisation or business. The purpose of
the Trading, Profit, and Loss account is to show the business whether or not it has made a profit or
made a loss over that 1 year period thus giving a better insight to the business owners to see
whether the business venture is successful or not and if it’s worthwhile for them to trade. If an
owner sees that he/she are making a huge loss then they may decide to stop trading as the business
venture will be deemed unsuccessful as the business will be losing a lot of money due to making a
loss.
Turnover can be defined as the amount of revenue or money generated from sales by a business or
organisation over a period of 1 year. The turnover figure for The Curry Lounge in 2014 was
£2175,000 and for 2015 the figure was £3300,000; the difference between the two years accounts
for the Curry Lounge is £1125, 000. There are many reasons why there is a difference of £1125,000
between the two figures for each year; one such reason may be that in the first year of 2014 the
Curry Lounge may have less customers as it had just introduced itself and may have been focusing
on another aspect of the business which was to get through the first year. In the second year the
business got a higher turnover because it had been established for 1 year in the location thus people
from the area were well known and familiarised with the restaurant and ate there.
Opening stock can be defined as the amount of stock that the business has at the beginning of the
financial year. Purchases can be defined as the amount of goods or stock that have been bought by
the business. Closing Stock can be defined as the amount of stock a business has at the end of the
financial year. Cost of Sales can be defined as the direct costs incurred by the business when
producing the goods that they sell; in order to calculate the costs of sales you have to carry out the
following formula which is opening stock + ( purchases & expenses ) – Closing stock which give the
business its cost of sales. The cost of sales figure for The Curry Lounge in 2014 was £750,000 and for
2015 the figure was £982,500; the difference between the two years accounts for the Curry Lounge
is £232,500. There are many reasons why there is a difference of £232,500 between the two figures
for each year; one such reason may be that in the first year of 2014 the cost of producing their
products or buying their product would be cheaper so products like meat and vegetables may have
been cheaper to buy in the first year. The reason for the increased cost of sales in the second year
may be because the cost of these products i.e. meat or veg may have increased this may be due to
many reasons; one being that there may have been an increase in demand for the meat wanted by
the business thus as demand increases the price of the product also increases. The reason for this is
that the business was booming and it needed to buy more stock to make more meals.
Gross Profit can be defined as the profit after deducting the cost of goods sold from the business
total revenue of the financial year; in order to calculate the gross profit you have to carry out the
following formula which is Total Revenue – Cost of goods Sold which give the business its Gross Profit
figure. The gross profit figure for The Curry Lounge in 2014 was £1425,000 and for 2015 the figure
was £2317,500; the difference between the two years accounts for the Curry Lounge is £892,500.
These figures show that the Curry Lounges performance was better in 2015 where it made an extra
£892,500 compared to the figure that the restaurant got in 2014 which was £1425,500. It clearly
shows the business did well and may have had more customers in the second year; this may be due
to many reasons; one such reason may be that a lot of customers’ went to the restaurant because
they may have been cheaper than other local restaurants or it may be due to the food they give
