Profit and Loss Account
The Profit and Loss account does exactly what it suggests it shows the profit or loss that a business has made over a period of time, usually six months or one year, this is called the accounting period. Once prepared the profit and lose account can be used by a number of interested parties in a number of ways, it can be compared to a previous profit and loss account to see how the business is fairing. Other interested parties are potential investors, current investors, shareholders, management, company accountants and inland revenue.In order for the profit and loss account to make any sense to interested parties who rely on them for decision making purposes there has to be consistency in the way the items are treated without this it would be impossible to use them to compare business performance. These rules are called the Accounting Standards and are set out as the ‘Statement of Standard Accounting Practice’ (SSAP) and recently as ‘Financial Reporting Standards’ (FRS). Together these statements bring about consistency for the reliability of the financial results that they report on. Without these standards being set out it would be very difficult to regulate the profit and loss account. For example how stock is valued wh
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Some common words found in the essay are:
Average Price, Standards FRS, First FIFO, Weighted Average, Profit Loss, Accounting Standards, SSAPs FRSs, profit loss, profit loss account, loss account, prices paid, current market, Practice SSAP, closing stock, balance sheet, stock valued, price calculated, average price method, adjustments written, account balance sheet, bear relevance, bear relevance current, relevance current market,
Approximate Word count = 1172
Approximate Pages = 5 (250 words per page double spaced)
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