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Profit & Loss AccountsProfit & Loss AccountsThe calculation of profit and loss is one The calculation of profit and loss is one of the most important objectives of of the most important objectives of accounting and shows how well a accounting and shows how well a business has traded over a particular business has traded over a particular period of time. Many stakeholders will be period of time. Many stakeholders will be interested in this.interested in this.

It shows how much the firm has It shows how much the firm has earned from selling its product or earned from selling its product or service, and how much it has paid service, and how much it has paid out in costs. The difference out in costs. The difference between these two is the amount between these two is the amount of profit that has been earned. A of profit that has been earned. A profit & loss account shows the profit & loss account shows the detail.detail.

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Trading and Profit & Loss Account: An IntroductionTrading and Profit & Loss Account: An Introduction

ObjectivesObjectives

On completing this unit, you should be able to:On completing this unit, you should be able to:

1.1. Understand the difference between gross profit & net profit Understand the difference between gross profit & net profit

2.2. Be able to draw up a Trading & Profit and Loss account from Be able to draw up a Trading & Profit and Loss account from information given in a Trial Balance information given in a Trial Balance

Approximate study timeApproximate study time

60 minutes60 minutes

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Learning Objectives