profit and loss

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  • Profit & Loss
    • Purpose
      • summarises all the sales revenue for the financial year
      • summarises all the payments or expenses for the same year
      • difference between the two totals is the profit and loss made in that year
    • Why produce a profit and loss account?
      • legal requirement. tax is paid on the profit
      • summarises all the years transactions - as recorded in documents such as invoices
      • shows the 'financial health' of a business
      • studied by managers, employees, shareholders, financiers, customers and other groups of stakeholders
    • Computers in profit and loss
      • spreadsheets can be used to complete profit and loss accounts
      • business account packages automatically produce profit and loss accounts
      • advantages include: speed, accuracy, instant access to information


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