Profit and loss account
A profit and loss account is a financial statement that summerises the financial transactions for a buiness over a period in time. In reference to charitable organisations it is sometimes known as an Income and Expenditure account.
In the United Kingdom the regualtion for partnerships, sole traders, charities and chartered institutes allows a degree of flexibility in the presentation of profit and loss accounts. However there is tight regulation over the presentation of limited companys, which is set out in the Company's Act 1989.
A typical profit and loss account for a limited company may look similar to the one shown below.
Wikipedia Ltd
Profit and Loss Account for the year ended 24 October 2002
Sales..............................................10,217,880
Cost of sales.......................................5,468,000
_________
Gross profit........................................4,749,880
Net Operating Expenses (see note 1..................2,333,605
__________
Profit on ordinary activities before
taxation and interest...................................2,416,275
Interest payable........................................5,250
__________
Profit on ordinary activities before taxation........2,416,275
Taxation.............................................1,080,000
__________
Profit for the financial year........................1,331,025
Dividends Paid.........................................140,000
Proposed....................................................75,000
215,000
__________
Retained Profit for the financial year....................1,116025
Note 1
Operating Expenses
Depreciation..........1,211,426
Wages and NI....908,110
Administration expenses........126,390
Distribution Costs..............87,690
_______
2,333,605