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Profit and Loss 2025

The profit and loss account is a key financial document that reports a company's performance by detailing revenue and expenses, ultimately determining profit or loss for the accounting period. It consists of two main sections: the gross margin section, which calculates the difference between sales and cost of goods sold, and the net profit section. The document is crucial for assessing a company's financial health and is derived from the trial balance.

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85 views4 pages

Profit and Loss 2025

The profit and loss account is a key financial document that reports a company's performance by detailing revenue and expenses, ultimately determining profit or loss for the accounting period. It consists of two main sections: the gross margin section, which calculates the difference between sales and cost of goods sold, and the net profit section. The document is crucial for assessing a company's financial health and is derived from the trial balance.

Uploaded by

adjobig
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PIGIER CI - BASIC ACCOUNTING AND FINANCIAL DOCUMENTS 2025- LICENCE 3

THE PROFIT AND LOSS ACCOUNT


The profit and loss account reports the performance of the business, the abilities of the managers
to make sales, to control the expenses and thereby to earn profit. All the revenue income and expenditure
items of the company during the accounting period are extracted from a document, the trial balance. The
total of the revenue balances less the total of the revenue expenditure balances can determine the profit
(or loss) of the period. The profit and loss account is considered as the most valuable document, from a
procedural viewpoint, to measure profit.
The profit and loss account is divided into the gross margin section and the net profit section. The
former, also called “trading account”, takes care of the difference between the amount of cash brought in
by the sales and the cost of goods sold. The “opening stock” refers to the merchandise left over from the
preceding accounting period, duly valued at historical cost and aggregated to the purchases in the
accounts. The “closing stock”, the merchandise still unsold at the close of the current year and also valued
at cost price, will be deducted from the last two figures to establish how much the merchandise has cost
the firm. In the balance sheet, the closing stock will be recorded as an asset. The profit and loss account
proper starts where the trading account finishes and the entire document will be considered as a single
financial statement.

Parks and Sparks Ltd


Profit and Loss Account for the year ending 30 June 20xx
£ £
Sales 45,000
Opening stock 5,320
Purchases 22,400
27,720

Closing stock 5,200


22,520
Gross margin 22,480
Salaries 10,800
Office expenses 510
Motor expenses 430
Rent and Rates 2,600
Telephone 400
1
Electricity 800
Postage 400
PIGIER CI - BASIC ACCOUNTING AND FINANCIAL DOCUMENTS 2025- LICENCE 3

Lesson objectives: by the end of this lesson, students should be able to talk about the profit and loss
account.

Activity 1: Read the text and select the right option.

The profit and loss account is made up of:


a. one section
b. two sections
c. three sections
d. four sections

Activity 2: Read the text and find in the text words corresponding to the following words or
phrases

1- capacité (à faire quelque chose)


2- faire, réaliser des ventes
3- frais, charges, dépenses
4- faire des bénéfices
5- revenu
6- exercice comptable
7- balance
8- états récapitulatifs des produits
9- états récapitulatifs des dépenses
10- marge brute
11- montant d’argent
12- espèces
13- coût
14- stock initial
15- restes
16- total
17- achats
18- stock final
19- coût historique
20- prix de revient
21- états comptables
22- enregistrer
23- coût administratif, charges administratives
24- ventes
25- charges d’entretien et réparation de véhicules et matériel de transport
26- charges locatives

Activity 3: Read the text aloud.


Activity 4: Read the text again and answer the questions below.
1. What is a profit and loss account?
2. What do we call the document showing the revenue income and the expenditure items during
the accounting period?
3. How do you determine the profit or loss the loss of the period?

2
PIGIER CI - BASIC ACCOUNTING AND FINANCIAL DOCUMENTS 2025- LICENCE 3

4. How many sections are there in a profit and loss account?


5. Is there any difference between the opening stock and the closing?
6. Is the closing stock an asset or liability? Justify your answer.

Activity 5: Translate into French the first paragraph of the text.

Activity 6: Translate into English the sentences below.


1. L’annexe fait partie intégrante des comptes annuels dont l’objet est de completer et de
commenter l’information donnée dans le bilan et le compte de résultat.
2. 2023 aura été une bonne année; nous avons considérablement amélioré notre performance
commerciale et notre résultat d’exploitation grâce à une réduction des coûts.
3. Le compte de résultat comporte des chapitres tells que le stock initial, le stock final, les charges
locatives, les ventes, les achats, les états récapitulatifs des produits, les charges de reparation
et d’entretien de véhicules et materiel de transport, la marge brute, etc.

Activity 7: Write about the profit and loss account. Mention:


- a definition and the type of document it is
- its main components
- its importance for companies
- people who draw it
- the risks companies are exposed to by not having it.

3
PIGIER CI - BASIC ACCOUNTING AND FINANCIAL DOCUMENTS 2025- LICENCE 3

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