Profit and Loss Account

Ø  Opening Stock:
Value of goods available at the start of the period.

Ø  Purchase Accounts:
Total cost of goods bought for resale during the period.

Ø  Direct Expenses:
Expenses directly related to purchasing or producing goods (e.g., transport, wages).

ØSales Account:
Total income earned from selling goods or services.

Ø Closing Stock:
Value of unsold goods at the end of the period.

ØGross Profit:
Profit from core trading activity (Sales – Cost of Goods).

ØGross Profit C/O (Carried Down):
Gross profit transferred to the next stage of the account.

Øndirect Expenses:
Expenses not directly related to goods, used for running the business (e.g., rent, water).

ØGross Profit B/F (Brought Forward):
Gross profit brought into Profit & Loss Account.

Ø  Indirect Income:
Income from non-business or secondary activities (e.g., commission, interest).

ØNet Profit:
Final profit after all expenses and incomes are adjusted.

Ø  Total:
Both sides of the account must be equal (balanced).