ABSTRACT
This chapter explores the various documents that form a set of accounts and what they contain. It deals with the: balance sheet, profit and loss account, cash flow statement and notes to the accounts. Many companies have quite complicated structures, with the parent company involved with many subsidiaries and associated companies. The profit and loss account (P&L) details the company's income, expenses and the resulting outcome over a given period. Subtracting the interest and tax charges yields the profit or loss the company's owners have enjoyed or endured over the period. A growing realization of the fundamental importance of cash led to companies being compelled to draw up cash flow statements. Operating activities covers the cash coming from the company's operations and from changes in current assets such as a decrease in stocks or debtors. Adequate capital expenditure or capex is needed to ensure that the size and quality of a firm's assets is appropriate to its operational requirements.
