Profit and Loss account or Income Statement
Profit and loss account or also known as the income statement is one of the major financial statements (others include: balance sheet, the cash flow statement, the statement of stockholder’s equity).
Profit and loss account shows the profitability of a company in a given period of time.
There are certain elements in the P&L which refer to revenues or gains from a certain type of activity or expenses and losses:
Take this short quiz to check what you already know:
1. Amounts earned by a company in its main operating activities are: a. Revenues
2. A company sells a car that is no longer used in its business. The amount received is more than the book value of the asset. The company will report a(an):
3. Is a company’s Interest Expense:
a. an operating expense or
b. a non-operating expense?
4. Net Sales minus the Cost of Goods Sold (COGS) equals:
a. Gross profit
b. Net income
5. Gross profit minus Operating expenses is also known as:
a. Net income
b. Operating income
Now check your answers below.
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Key: 1. a/ 2 b / 3 b/ 4 a/ 5 b
Profit and loss account (P&L) or Income Statement – Rachunek Zysków I Strat
Profitability – rentowność
Revenues – przychody
Gains – zyski finansowe
Expenses – wydatki
Losses – straty
Operating activity – działalność operacyjna
Investing activity – działalność inwestycyjna
Financial activity – działalność finansowa
Single-step – format uproszczony
Multiple-step – format kalkulacyjny
Net income – przychody netto
Cost of goods sold – koszt sprzedanych towarów
Book value – wartość księgowa
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