profit-loss account12

May 13th, 2015
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profit loss accounting description of statements PRESENTATION ON PROFIT

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PRESENTATION ONPROFITPresented by ::John Leo.WMEANING OF PROFITProfitmeans all income that flows to theinvestor.It also means the excess of revenueover all paid-out cost including bothmanufacturing and overhead expenses.Economistsconcept of profit is of pureprofit also called as economic profit.e.g. consider the income which abusinessman might expect from thesecond best alternative use of hisresource.Types of profits.Gross ProfitNet ProfitPure Profit(Economic profit)A/CING PROFIT & ECONOMIC PROFIT Accountingprofit is a surplus of revenue over andabove all paid out cost, it includes both manufacturingand overhead expenses. to calculate a/cing profit there is a formula whichsays,Accounting profit= TR-(W+R+I+M),Where TR=total revenue, W=Wages ,R=rent,I=interestand M=Cost of materials. while calculating a/c profit, only explicit or bookcosts,i.e. the cost recorded in the books of accountsare considered.EconomicEconomic profit consist not only of the profit. But italso takes into consideration hidden costs such asrevenue from second best alternative.The Difference Between AccountingProfit and Economic ProfitRevenue Acct Costs = Acct ProfitRevenue Econ Costs = Econ ProfitRevenue Explicit Costs = Acct ProfitRevenue (Explicit + Implicit costs) = EconProfitAcct Profit Implicit Costs = Econ ProfitIf Acct Profit e

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