Profit or loss Account

[bhatti55]

Aslam-o-Alekum,Any body explain profit and loss acoount and also make a profit and loss account.

[Gull]

The Profit & Loss Account (P&L) is a report of the company's profit on the sale of their goods The Profit and Loss (P&L) account summarises a business' trading transactions - income, sales and expenditure - and the resulting profit or loss for a given period.
he profit or loss arose – e.g. categorising costs between “cost of sales” and operating costs. A profit and loss account starts with the TRADING ACCOUNT and then takes into account all the other expenses associated with the business.

Trading account
The trading account shows the income from sales and the direct costs of making those sales. It includes the balance of stocks at the start and end of the year. in trading account Opening stock and purchases and direct cost(wages,manufacturing expences and freight in) written on debit side while as sales and closing stock written on credit side.then we find out GROSS PROFIT OR LOSS if loss then its written on credit side and if profit then u written on debit side...

A profit and loss account is produced primarily for business purposes - to show owners, shareholders or potential investors how the business is performing. But most of the information is also used by HM Revenue & Customs to work out your tax bill.This guide tells you about the basic financial records you need to keep to enable you to report your profit or loss each year.The information should help you decide whether you need the services of an accountant or bookkeeper, or whether you can do it yourself.in profita nd loss account all indirect income(commision received, interest received)written on credit side below of Gross profit and all expences like(salary,depreciation,petty expences, commision allowed and interect allowed and rect ,printing and stationary etc)written on debit side and after calulation u find out a net income (on debit side) or net loss(on credit side)

[Gull]

for further information plz visit on

http//www.tutor2u.net/business/gcse/finance_profit_and_loss_account.htm

[Gull]

The typical format of a Profit and Loss Account is -

Turnover / Sales
Cost of Sales
Other Direct Expenses
Subtotal
Gross Profit
Other Income
Subtotal
Overhead Expenses (including Depreciation)
Subtotal
Net Profit
Other Direct Expenses would typically include the wages of people making raw materials into finished goods, or packing materials.

Other Income would typically include Interest Earned on money on deposit.

Overhead Expenses are those expenses which tend not to vary directly with the level of sales. They include Rent, which will only vary with the level of sales, if sales increase to an extent that larger premises are required.

Accounts which we prepare normally show each of the expenses as a percentage of sales. This helps to identify trends in the figures from year to year.