ptofit and loss account1

May 13th, 2015
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profit and loss statement describe Concepts Of Profit

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CONCEPTS OF PROFITNeeraj KumarIntroductionJust like rent is the reward for land, wagesfor labor and interest for capital, profit isthe reward for entrepreneurship. profit is the income of an entrepreneurforutilizinghisentrepreneurialabilities and running a business. Profit is nothing but the surplus amount leftwith the entrepreneur after paying all thefactors of production.Therefore, profit can also be defined as thedifference between the total value ofoutput (total revenues received by thebusinessman) and the total value of inputs(total costs incurred by the businessman) ofa business.Profit =Value of Outputs - Value ofInputsProfit = TR TCFeatures of ProfitIt is not a predetermined contractualpayment.It is not a fixed remuneration.It is a residual surplus.It is uncertain.Measure Of PerformanceConcepts Of ProfitAccounting Profit Profit is the surplusof revenue over and above all paid-outcosts,includingbothmanufacturingand overhead expenses.Economic Profit It is the differencebetween a Companys total revenueand its opportunity cost.Accounting Profitan accounting profit is the excess ofbusiness income over the businessexpenses.The business earns money after sellingtheir goods or services.If the money they earn is more than themoney they spend for making/providingthe goods/services, it is said that thebusiness has made an accou

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