Read the month-end update

At the end of April, Green Lane Bakery reviewed its accounts. The bakery earned £24,000 in sales, which is its revenue. It spent £15,500 on ingredients, wages and rent; these costs are its expenses. It also has a delivery van and baking equipment, which are assets the business owns. The bakery still owes £2,000 to a flour supplier, so this amount is a liability. After paying its bills, £1,800 more came into the bank than went out. This positive cash flow means the business had more cash arriving than leaving during the period. The accountant also recorded depreciation: the gradual reduction in the recorded value of equipment as it gets older and is used.