Profit and Loss Account Coursework Example | Topics and Well Written Essays - 500 words

Profit and Loss Account - Coursework ExampleThe indirect costs (those that cannot be directly attributed to generating revenue) are then deducted from the gross addition to give a net income figure.A single profit and loss account provides information about how much it costs to generate sales, and how much agency for manoeuvre the disdain has before an increase in the costs of generating those sales causes the business to become unviable (e.g. raw materials may increase to a point where it is no longer financi solelyy viable to make a particular product). This can be shown by considering the gross profit as a percentage of the sales revenue. The same can be applied to the indirect expenses of the business. Monitoring these costs can mention when a particular supplier is becoming too expensive, and the business should look for another supplier who offers better value for money. The net profit figure, as a percentage of the sales revenue indicates the total effect of all costs rel ating to the business and whether the business continues to be viable and generates profits for the owner (in this case Peter).Peters profit and loss account indicates that he rents property preferably than owning his own factory or workshop. The depreciation figure is not broken down, which means that the type of assets that are subject to depreciation cannot be seen, although the motor expenses indicate that the business probably owns some form of motor vehicle.