chapter3 - The profit and loss account (income statement) l...

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The profit and loss account (income statement) l What does the profit and loss tell us? l What is profit? l Structure of the profit and loss account l Format of the profit and loss account l Income statement and Balance Sheet l Income Statement and Cash Flow
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What does the profit and loss tell us? l shows the change in wealth of the business over a period. Wealth of the business is the amount it is worth to the owners. l calculates whether or not the firm has made a profit or loss on its operations during the period. Net profit or loss is derived from deducting expenses incurred from revenues (sales)
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The Main Elements Of The Profit And Loss Account The Main Elements Of The Profit And Loss Account
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What is profit? ¡ The profit (or loss) of an entity may be considered from two perspectives: l by considering the change in wealth between the start and end of an accounting period: total assets (TA) – total liabilities (TL) = equity (E) + profit (P) P = TA – TL – E
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What is profit? ¡ By considering the summarisation of all trading and non-trading transactions through deducting total costs from total revenues (sales) that have occurred during an accounting period: Profit (P) = Total Revenue (TR) – Total Costs (TC)
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Structure of the profit and loss account ¡ Levels of profit within the profit and loss account ¡ Elements of the profit and loss account
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Levels Of Profit Within The Profit And Loss Account Levels Of Profit Within The Profit And Loss Account
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Elements Of The Profit And Loss Account (1) Elements Of The Profit And Loss Account (1)
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This note was uploaded on 09/14/2010 for the course ACCOUNTING 311 taught by Professor Peter during the Summer '10 term at St. Louis CC.

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chapter3 - The profit and loss account (income statement) l...

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