Revenue and costs

• Economie
• Middelbare school
• vwo
• Leerjaar 3

Revenue and costs

assets - debts = equity

900 - 400 = 500

Assets			Debts
Inventory	€ 500	Equity	€ 500
Goods	€ 300	Bankloan	€ 300
Cash	€ 100	Creditors	€ 100
Total	€ 900	Total	€ 900

Expenditure and costs

Expenditure = uitgave             Cost = kosten

You buy a car of € 15,000. You pay cash. This is an expenditure.

It's not a cost. 

Assets			Debts
Car	+ € 15,000
Cash	- € 15,000

Effect of a purchase of a fixed asset

The total amount of assets doesn't change. The equity remains the same

Assets			Debts
Car	+ € 15,000
Cash	- € 15,000

Example of car related costs

You have to pay insurance premium € 25 per month by bank.

This is a cost. You spend € 25 and do not get a asset in return.

Total amout of assets decreases. Equity decreases as well.

This is also an expenditure

Assets			Debts
Bank	- € 25	Equity	- € 25

Another example of an expenditure but not a cost: repayment of debt

Jimmy has a bank loan of € 300. Repayment per year is € 100 by bank

Equity doesn't change. Assets decreases with € 100 and debts also decreases with € 100

Assets			Debts
Bank	- € 100	Bank loan	- € 100

Another example of expenditure but not a cost: purchase of goods

Jimmie purchases goods (butter, lettuce) for an amount of 

€ 50. He doesn't pay in cash but receives a bill

Equity is not affected. Total assets increase but debts also increase. 

Assets			Debts
Goods	+ € 50	Creditors	+ € 50

	Expenditure	Costs
Purchase of fixed asset	Yes	No
Purchase of goods	Yes	No
Repayment of debt	Yes	No
Depreciation	No	Yes
Wages	Yes	Yes
Insurance	Yes	Yes
Gas	Yes	Yes
Most of the expenditures	Yes	Yes

Do exercise 3 type in:
A = ....
B =.... etcetera

Changes to the profit and loss account: costs

Paying wages € 3,000

Wage costs

+ 3,000

Changes to the profit and loss account: turnover

You make € 5,000 by selling tablets. The costs of sales is 

€ 2,000

Costs of sales

+ 2,000

Turnover

+ 5,000

Exercise 5 - 8

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