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Profit and Loss Account.
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Financial Accounting Homework CHRIS EVERY CLAYTON Profit and Loss Account The profit and loss account looks at how well the firm has traded over the time period concerned (usually the last 6 months or year). It basically shows how much the firm has earned from selling its product or service, and how much it has paid out in costs (production costs, salaries and so on). The net of these two is the amount of profit they've earned. A profit and loss account would usually be made up as follows: - £ Million Turnover (sales revenue) 500 Less Cost of goods sold (200) Gross profit 300 Less other costs @ (100) Trading / operating profit 200 **** Profit for shareholders (dividends) 75 Retained profit 125 These other costs may include marketing and distribution costs, office costs and so on. They are also known as indirect costs or overheads. **** In here may also be included any other income or expenses. These may include interest - paid or received - tax, extraordinary items...
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