Profit and loss account concepts, Accounting Basics

Assignment Help:

PROFIT AND LOSS ACCOUNT CONCEPTS:

The initial point in accepting the profit and loss account is to be clear about the

Significance of "profit". Profit is the return for taking risk. Profit has a significant role in assigning resources (land, labour, capital and enterprise). Put basically, falling profits indication that resources should be taken out of that business and put into one more one; increasing profits signal that resources should be stimulated into this business. The major task of accounts, so, is to monitor and measure profits. Profit = Revenues less Costs. So observing profit also means measuring and  monitoring revenues and costs. There are two parts to this:-

1) Recording financial data. This is the 'book-keeping' part of accounting.

2) Measuring the result. This is the 'financial' part of accounting. Profits are 'spent' in three ways.

1) Preserved for future growth and investment.

2) Returned to owners, example, a 'dividend'.

3) Paid as tax.


Related Discussions:- Profit and loss account concepts

What is managerial accounting information, Q. What is Managerial accounting...

Q. What is Managerial accounting information? A Managerial accounting information is for internal use and provides special information for the managers of a company. The inform

Assignment 3, Financial accounting reports are mandatory to be prepared by ...

Financial accounting reports are mandatory to be prepared by the firms, and are scrutinized by auditors, creditors or Government or Tax authorities. But management accounting recor

Accounts, “Ledger is said to be the principal book entry and the transactio...

“Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.

Find out the present value of the profit, Oil production has been proposed ...

Oil production has been proposed for an area along the coast off Southern California. Oil production would jeopardize the use of beaches along 10 miles of coast which are a major v

Adjusting entries in the general journal, Adjusting entries in the general ...

Adjusting entries in the general journal Be sure to put down the words "Adjusting Entries" at the beginning of journal after the last entry of month. By placing these words at

Describe about assets, Q. Describe about Assets? Assets are things of w...

Q. Describe about Assets? Assets are things of worth owned by the business. They are as well called the resources of the business. Illustration includes machines, cash and buil

Student, Ask 1. What is the organization that is responsible for setting In...

Ask 1. What is the organization that is responsible for setting International Financial Reporting Standards? 2. What is the main company that Professor Levine uses for illustratio

Describe about net sales, Q. Describe about Net sales? Sales -- amounts...

Q. Describe about Net sales? Sales -- amounts received or due for services or goods sold to customers. Gross sales aretotal sales before any returns or adjustments. Net sales a

What is unbilled training fees, Q. What is Unbilled training fees? A co...

Q. What is Unbilled training fees? A company may possibly perform services for customers in one accounting period while it bills for the services in a different accounting peri

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd