Proift & Loss Account

This is a financial statement that shows a businesses revenues, expenses and profit / loss over a period of time

• Gross profit = Sales – cost of sales
• Net profit = Gross profit – overheads
• Retained profit = Net profit – tax – dividends
• Trading account – shows the income earned by the business over a trading period
• Appropriation account – the uses of net profit after taxation

The following groups are interested in a businesses profit and loss accounts:

• Shareholders
• Managers
• Employees
• Inland revenue / government

Profit or Loss diagram

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