Profit and Loss Account (Byte Size Skills Course)

Businesses are created with the intention of producing wealth for their owners and profit is a measure of the wealth that has been created during a particular period. Profit is generally considered to be the most important measure of business performance and the amount of profit generated by a business is reported in a profit and loss account.

In this course, we provide an understanding of the nature, form and content of the profit and loss account which is also known as the income statement. We examine the way in which profit is measured, and the way in which basic profit and loss accounts and balance sheets are prepared from a series of business transactions.

By the end of this course, you should be able to:

• explain the nature and purpose of the profit and loss account
• set out the basic form of the profit and loss account and explain its relationship with the balance sheet
• explain the major conventions underpinning the profit and loss account
• explain the major principles involved in the measurement of profit
• prepare a profit and loss account and a balance sheet from basic transactions
• set out profit and loss statements in an appropriate form.

Syllabus

Introduction

Objectives

Section 1: Introduction to the Profit and Loss Account

1.1 The Measurement of Profit

1.2 Relationship Between Profit and Loss Account and Balance Sheet

1.3 Forms of Revenue and Expense

1.4 Owners' Capital and the Profit and Loss Account

Section 2: Measurement of Revenues and Expenses

2.1 The Measurement of Profit

2.2 The Matching Convention

2.3 The Accruals Convention

2.4 The Measurement of Expenses

2.5 A More Detailed Illustration

2.6 Practical Implications of Accruals Accounting for the Preparation of Final Accounts

Section 3: Form and Content of Profit and Loss Accounts

3.1 The Profit and Loss Account of Trading Businesses

Summary

Review Activity

Recommended Reading

Tutor-marked Question Paper

On completion of your course, you will receive the dual award:

Award 1 is issued by Stonebridge Associated Colleges: Profit and Loss Account (Byte Size Skills Course) Certificate

Award 2 is issued by our Awarding Body: Level 1 Profit and Loss Account (Byte Size Skills Course) Award

At the end of this course successful learners will also receive a Level 1 NCFE Award Certificate of Achievement. Our course has been accredited under our NCFE IIQ Licence and the course measurable learning outcomes have been benchmarked at Level 1 (using Ofqual's Qualification and Credit Framework (QCF) level descriptors) to allow you to consider the depth of study, difficulty, and level of achievement involved.

There is no experience or previous qualifications required for enrolment on this course. It is available to all students, of all academic backgrounds.