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Business Finance Trading, Profit and Loss Account Text Book
What is Profit?
As it's simplest, profit is what remains from revenue once costs have been deducted. However in the
construction of the profit and loss account there are two main types of profit identified.
1. Gross profit. This form…
The sales revenue figure should only include sales once the goods are delivered to the customer.
Goods that a produced but not sold (perhaps because they are added to stock) should only be a part
of sales revenue when a customer receives them. This may occur in a different trading…
The addition of nonoperating income provides the net profit before tax for a company. This figure is
frequently referred to as simply `net profit'. The Inland Revenue uses this figure as a basis for its
computation of the tax liability of the company. All companies earning a certain level of…
Sole traders are businesses owned by a single person. The profit and loss account for a sole trader is
very similar to those of companies. Two principle differences exist:
Sole traders are normally give more information on the businesses expenses. This is
possible due to the business's financial affaires being…
controlling these. Finally the level of net profit is of value to interested parties as are the uses to which
profit has been put. This latter information might suggest how successful the venture may be in the
future. If large amounts of profit are retained for reinvestment, the company may…
Profit & Loss Accounts Class Notes
The profit and loss account shows where the business has made money e.g. sales (revenue),
Grants / subsidies, selling assets, shares & dividend payments.
It shows what a business has spent money on direct costs (variable costs) or indirect costs
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