# Profit & Loss Account - The Basics

Revision of the introductory theory to the Profit & Loss Account.

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What is Sales Revenue?
a.k.a. Sales turnover, income from sales. This is the money the business receives from customers in exchange for products/services.
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How is the Sales Revenue calculated?
Number of Items Sold x Selling Price. (SR = NIS x SP)
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What is the Cost of Sales?
This is the costs the business incurs in order to make the products to sell.
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How is the Cost of Sales calculated
Opening Stock + Purchases – Closing Stock (CoS = OS + P - CS)
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What is Gross Profit?
The Gross Profit is profit from sales once the cost of sales has been deducted.
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How is Gross Profit calculated?
Sales Revenue – Cost of Sales (GP = SR – CoS)
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What are expenses (a.k.a overheads)?
Expenses are the ‘running costs’ a business has in order to make and sell the product. This commonly includes expenses such as wages and salaries; rents, rates and insurance; Light, heat and power; telephone and broadband.
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How is Total Expenses calculated?
By adding all the given expenses together. (E+E+E+E=TE)
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What is Net Profit?
Net Profit is the profit once the expenses have been deducted.
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How is Net Profit calculated?
Gross Profit – Total Expenses. (NP = GP – TE)
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## Other cards in this set

### Card 2

#### Front

How is the Sales Revenue calculated?

#### Back

Number of Items Sold x Selling Price. (SR = NIS x SP)

### Card 3

#### Front

What is the Cost of Sales?

### Card 4

#### Front

How is the Cost of Sales calculated

### Card 5

#### Front

What is Gross Profit?