Every company that is incorporated in UK and that is listed in the UK Stock Exchange has to adhere to the Combined Code on Corporate Governance. Tis code contains recommendations by the Cadbury and Greenbury reports on Corporate Governance, Trnbill reports and Smith Guidance. Trnbill report gives guidance of how directors should comply with internal controls. Sith Guidance gives mandates on compliance regarding audit committees. A Income statement is essential to arrive at the net profit/loss made by the business at the end of an accounting period. Tere types of profits that can be calculated, nmely, goss profit, oerating profit and profit before and after tax.
Goss profit is the profit that is arrived at by just subtracting from sales, al direct expenses related to sales. Oerating profit is the one that show whether the company is operating efficiently or not. I refers to the profit of a company before deduction of expenses like interest and tax. I is also called EBIT. Pofit before and after tax refers to the net profit of the company. Pofit before arrived at by deducting all the expenses except tax from the operating profit.
Pofit after tax is arrived at by deducting the tax amount from profit before tax. Se appendix 1 for pro forma income statement for the company. Dpreciation is the charge against an asset and is entered in the income statement as expenses in order to arrive at the correct profit and loss figure of a company. A asset faces depletion in its value over time due to factors like wear and tear, osolescence etc. Terefore, should shown in the books only in the depleted values.
I is for this, dpreciation is charged. Te two main methods used to measure depreciation are straight line method and diminishing value method. Alocating overhead cost is another challenging job for the company. Fll costing method can be used by the Company for arriving at the cost. “ull cost accounting describes how goods and services should be priced to reflect their true costs (including environmental and other social costs). ”(Carnegie Mellon, 2010) Thus the price of a product is fixed using this method will reflect even the environmental and social cost involved in the production of a product.
Idirect costs are the one that is indirectly related to manufacturing and sales of a product or service. Sch expenses. ..
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