Question

General definitions of profit and loss chapter

Answer 1

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The profit & loss statement summarizes the revenues and expenses generated by the company over the entire reporting period. The profit & loss statement is also known as the income statement, statement of earnings, statement of operations, or statement of income.

Answer 2

Cost price : The price originally paid in buying an article is called its Cost Price (C.P.), or outlay.

Selling Price : The price that is realised by selling an article is called its Selling Price (S.P.), or Turnover.

Turnover : It denotes the cash value of the sales and thus equivalent to selling price,

Profit or Loss : The difference between selling price (S.P.) and cost price (C.P.) gives profit or loss.

Gross Profit and Net Profit : Gross Profit and Net Profit are defined as follows:

Gross Profit = Total Sales - Direct Cost

Net Profit = Gross Profit -- Indirect Cost