you can tell by seeing something as a loss or a profit.
example -
you bought a Mobile Phone @ £102 - then you sold it at £130 that would be a profit
a loss would be to sell something for under the price you bought it at for example - chocolate bar 79P you sold it for 40P.
as simple as that to know the net profit or loss from business in an accounting period. for more about financial accounting visit indianaccounting.blogspot.com
Profit or loss = income - expenses. A positive number is profit, a negative number is loss.
Tradition, and the need to call it something.
Profit and Loss.
The incremental profit or loss is the change in profit or loss over the designated time period. After calculating the profit or loss, for example on a monthly basis, the delta between that and the average monthly profit or loss from the prior year can be determined.
Profit and loss accont is used to calculate the profit or loss of business while profit and loss appropriation account is used to allocate or distribute net income or loss to share holders or different reserves account.
what are the advantages of profit and loss statement?
"What are the limitations of profit and loss account?"
it makes the legitimate business owner to make no profit and when the profit decline, workers loss their jobs
: Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period, Profit and loss account gives the actual information about indirect expenses, Profit and loss account serves to show the ratio between net profit to sales, Profit and loss account helps in showing the ratio between net profit to operating expenses, Profit and loss account helps in controlling indirect expenses
profit
You calculate loss the same as you would do profit income minus expenses (outgoings) = profit/loss If the answer is negative then you are making a loss, if the answer is positive then you are making a profit.