A profit and Loss (or Income) Statement details the trading performance of a business over a period of time, and their production is a legal obligation for all publicly listed companies.
ABOUT THE INCOME (PROFIT & LOSS) STATEMENT:
- The turnover is the total sales revenue for the period (or the money you received from selling your goods).
- The cost of sales (or direct or variable costs) includes raw materials, labor costs (that can be directly attributed to output) and any other direct product production costs.
- Expenses (or indirect (fixed) costs or overheads) are costs that are not directly attributable to output such as money spent on business stationery.
- Depreciation is a value to account for the fall in value of a fixed asset as it is used up, such as a computer.
- Dividend is the share of profit that is paid to the shareholders.
- Retained profit is profit that is not paid to shareholders but is retained by the company to fund its growth and expansion.
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