Profit and Loss Account Basics - Page 2

A typical p&l will contain the following:

Sales

This is the turnover of the business, the main source of income from sales of products or services. This figure is always net of taxes as these are payable to the government and do not form part of the income of the business.

Purchases (stock/inventory)

Purchases are the items of stock you buy in order to sell on to customers. A basic accounting principle is that income is exactly matched against the cost of generating that income. In this regard the stock or inventory on hand at the end of the accounting period is always deducted from the total purchases cost. These stock items will be used to generate future sales and will be matched against those sales in the next period.

"Profit and Loss Account Basics - Page 3"

"Profit and Loss Account Basics"

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"Profit and Loss Account Basics - Page 3"

"Profit and Loss Account Basics"

Back To The Startup Hints Front Page