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Archive for the ‘Profit’ Category

When one is running a business, understanding the language accountants throw at you is quite a useful skill to master, although of course accountants should not be using accountancy jargon when they advise their clients, many still do, and even those accountants who make a point of using layman’s terms where possible, do have to occasionally slip in the odd technical term or two simply because there is no other way to convey what they need to.
Something that accountants often talk about is the profit and loss account or P &L; it is an incredibly important financial document that is well used by financial professionals throughout the business world, so what is a profit and loss account?
Put simply, it is a summery of all of the sales revenue and expenses of a company over a specific period of time, most commonly a quarter or year, Which results in a company’s profits and in its losses.

Its standard format Consists of an entry of the company’s revenue with a subtraction of its expenses or running costs, finally completing the information with the company’s net income (its profits or losses).
Providing a snap-shot of a company’s profits and / or losses in this way Allows potential investors, lenders and company directors to get a solid idea about the direction that the business is moving in.