profit and loss account Flashcards
what is profit and loss account also called as?
statement of comprehensive income
what is a profit and loss account?
a summary of the enterprise’s activities over a specitic period of time, usually a year.
why is the profit and loss account used by several interested group of people?
to understand how well the enterprise is performing
what is the sales revenue?
receivea by the enterprise from selling
Its products
why is the sales revenue called sales, turnover and the net sales?
because it takes into account any
price discounts or goods returned by customer
what does the cost of sales include?
the cost of making the products
how do you calculate the gross profit?
sales revenue - cost of sales
what are expenses?
the indirect costs incurred when running an enterprise
what are listed separately in the profit and loss account?
the expenses
when can the net profit be calculated?
once sales, cost ot sales and expenses are identified.
how do you calculate the net profit?
gross profit - expenses
purpose of profit and loss account:
what does the financial document show from sales of goods and services?
how much revenue the enterprise has received
purpose of profit and loss account:
what does the financial document show how much of what?
how much an enterprise has spend
purpose of profit and loss account:
what does the financial document show of what was spent?
where the money was spent
why will several groups of people be interested in the profit and loss account?
as they will want to know that the enterprise is being well run.
