U2 A4

In: Business and Management

Submitted By fezi
Words 257
Pages 2
Profit and loss account
Most businesses exist in the market in hope that they make profit. To make profit, a business needs to maximise their sales revenue and minimise their costs of production. A profit is basically a reward for taking risk. Profit and loss account is record of all the ups and down of a business over a period of time, this is normally recorded annually.
Turnover – This is the amount of sales revenue made by a business in a specific period f time.

Cost of Sales – this is the expenses of producing a good or a service. This directly attributes to the production of the good or service. For example: * For a manufacturer the cost of sales would be the cost of materials to produce that product. * For a retailer it is the cost of merchandising the product.

Gross Profit – gross profit is calculated by taking away the cost of sales from the total revenue. Gross profit does not take in account of cost of production.

Stock – a stock are the products that are bought by a business but are yet to be sold. It is still in the process of being sold. But the costs of these products are added to the cost of sales.

Mark-up – this is the percentage of the products cost added on to its price, so the product sold for more than it is bought for. This equals to profit.

Gross Profit margin – this is percentage of profit that a business makes form the sales of its product.…...

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