Profit and Loss Accounts

Topics: Balance sheet, Generally Accepted Accounting Principles, Income statement Pages: 4 (969 words) Published: November 17, 2010
Within this assignment I will be interpreting the contents of the British airways accounts I will also be writing a statement about the business and its progress, and describe what profit and loss accounts are. PROFIT AND LOSS ACCOUNT

By law business are required to provide annual financial statements, which will appear in their company report, there are two main types of financial statements, one is balance sheet and the other is a profit and loss account. A profit and loss account is a record which can be updated regularly and generally shows businesses transactions made over a period of time (usually within 12 months), An example profit and loss account of a business. and expenses associated with the business. It will basically show how well the business is doing and calculate all profits and losses made etc.

These are some of the key terms found on a average profit and loss account Turnover/revenue
Turnover/revenue is the amount of money that a company receives in a given period of time usually at the end of the year from selling their products/services; it is calculated by multiplying the number of products that have been sold by their selling price. (Price x Quantity) Gross profit

Gross profit is another important financial term referring to the amount of money that a business would make after deducting all costs related to those sales. These costs can include manufacturing expenses, raw materials, labour, selling, marketing and other expenses used to create and sell the product. Operating profit

A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes. Also called EBIT (earnings before interest and taxes) or operating income. Profit before interest and taxation

This is basically, the money earned by a company before any interest and taxes have been deducted. It can also been known as operating earnings. Profit on ordinary activities before taxation
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