Management accounts provide more detailed information – measuring performance and profitability of the business, can be provided monthly, quarterly, half yearly and annually.
To provide managers information that is critical for the business success.
Profit & Loss account
This is a statement that can be a consolidation of several cost centres – departments – projects
Trial Balance provides the reconciled figures
Trial Balance is a listing of reconciled figures that can be produced once all income and expenses have been recorded and the Bank transactions have been reconciled at a given time, for example end of the month. The Trial Balance represents all transactions for income, expenses, assets, bank balance, creditors, debtors, accruals, prepayments, vat account, capital etc. Depending on what level of detail you require to review a trial balance can be set up for your individual requirements. For the purpose of the Profit & Loss account only income and expenses are recorded. All other transactions are recorded on the Balance Sheet. Please see Financial accounts tab for further information regarding Balance Sheet items including accruals and prepayments.
Here is a simplified layout of a Profit & Loss Account
Turnover £ 10,000
(Total sales made, other wise known as revenue or income)
Less cost of sales – (cost associated directly to the sale) £ – 1,000
Gross Profit (sales margin) £ 9,000
Less Overheads ( operating expenses) £ – 3,000
Net Profit £ 6,000
It is important that business owners understand their management accounts, mainly so they can work out what they need to bring in to meet their target profit.
For example
Increase prices
Review Supplier cost
In addition the Profit & Loss account can be used to compare to the budget figures so variances can be reviewed and actions taken
We can produce your trial balance and profit & loss statements monthly, quarterly, half yearly and annually – Note if you wait for annual management accounts it may affect your business as actions needed may have been delayed and impacted your profitability. Recommendation would be to look at quarterly accounts or half yearly accounts at the very least.