NationMaster - Encyclopedia: Profit and loss account

A profit and loss account is a financial statement that summarizes the financial transactions for a business over a period of time. In reference to charitable organisations it is sometimes known as an Income and Expenditure account. Wikipedia does not have an article with this exact name. ... Elements of the income statement used in accounting are net income results from revenue, expense, gain, and loss transactions. ... Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. ...

Example

A typical profit and loss account for a limited company may look similar to the one shown below.

 Profit and Loss Account for the year ended 31.12.2004 Sales............................................................10,217,880 Cost of sales.....................................................5,468,000 _________ Gross profit......................................................4,749,880 Net Operating Expenses (see note 1)...............................2,333,605 _________ Profit on ordinary activities before taxation and interest........2,416,275 Interest payable......................................................5,250 _________ Profit on ordinary activities before taxation.....................2,411,025 Taxation..........................................................1,080,000 _________ Profit for the financial year.....................................1,331,025 Dividends Paid......................................................140,000 Dividends Proposed...................................................75,000 _________ Retained Profit for the financial year............................1,116,025 Note 1 Operating Expenses Depreciation................1,211,426 Wages and NI..................908,110 Administration expenses.......126,390 Distribution Costs.............87,690 _______ 2,333,605

Sales, or the activity of selling, forms an integral part of commercial activity. ... Cost of sales is an economical term describing the sum of all expenses that directly contribute to the generation of revenue. ... The difference between turnover and the cost of making a product or providing a service, before taking into account overheads, salaries and wages, and interest payments. ... In accounting, an expense is a general term for an outgoing payment made by a business or individual. ... Profit is defined as the residual value gained from business operations. ... In finance, interest has three general definitions. ... Profit is defined as the residual value gained from business operations. ... Profit is defined as the residual value gained from business operations. ... A dividend is the distribution of profits to a companys shareholders. ... A dividend is the distribution of profits to a companys shareholders. ... In accounting, retained earnings are profits that were not paid to a companys shareholders as dividends. ... Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ... A wage is the amount of money paid for some specified quantity of labour. ... National insurance is a system of taxes, and related social security benefits, that has operated in the United Kingdom since its introduction in 1911, and wider extension by the government of Clement Attlee in 1946. ...

introduction to the profit and loss account (871 words)
	Profit is the reward for taking risk; generally speaking high risk = high reward (or loss if it goes wrong) and low risk = low reward.
	The main task of accounts, therefore, is to monitor and measure profits.
	Internal accounts are rarely ‘fixed’, because there is little point in the managers fooling themselves (unless fraud is going on) but public accounts are routinely ‘fixed’ to create a good impression out to the outside world.

profit and loss account - definition of profit and loss account in Encyclopedia (219 words)
	A profit and loss account is a financial statement that summarizes the financial transactions for a business over a period in time.
	In reference to charitable organisations it is sometimes known as an Income and Expenditure account.
	In the United Kingdom the regulation for partnerships, sole traders, charities and chartered institutes allows a degree of flexibility in the presentation of profit and loss accounts.

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