Profit and Loss Account - JSS3 Business studies Lesson Note

A profit and loss account summarizes all revenues and expenses of a business during a specific period to calculate its net profit or loss. It includes both operating and non-operating incomes and expenses.

Common Components of a Profit and Loss Account:

• Operating Revenue: Revenue generated from the primary activities of the business.
• Cost of Goods Sold (COGS): Direct costs associated with producing goods or services.
• Gross Profit: Revenue minus COGS.
• Operating Expenses: Costs incurred from running the business (e.g., salaries, rent, utilities).
• Non-operating Income/Expenses: Revenue or expenses not directly related to the core business operations.
• Net Profit/Loss: The difference between total revenue and total expenses.