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Ppt Forex Trading Basics – Basic Concepts of Profit and Loss Account
Forex Ppt trade basics
What is an income statement?
The profit and loss account (P & L) is usually presented as a statement and showing trading activity and associated expenditure of an organization during a period of time.
A typical p & l will contain the following:
Sale
This is the turnover of the company, the main source of income from sales of products or services. This figure is always net of tax as these are paid to the government and not part of the revenue of the company.
Shopping (stock / inventory)
Purchases are the items you buy stock to sell to customers. One of the basic principles of accounting is that income exactly matches the cost of generating that income. In this sense, the stock or inventory on hand at the end of the accounting period is always deducted from the total cost of purchases. These action items are used to generate future sales and compared with sales in the coming period. Forex Trading Basics Ppt
Rent expense related
These costs are those directly involved in the process of making a sale to a customer. It include items such as sales commission, advertising expenses and courier charges.
Overheads
Finally, there are costs general business. These are the costs incurred in the rest of the businesses that are not directly involved in the sale process. Examples of overhead costs are salaries administrative staff, lighting and heating, office supplies, computer maintenance and legal and accounting expenses.
Two versions of the income statement
In the published accounts of the p & l account in a standard format, that is to help the understanding and interpretation information. The accounts are known as financial (or legal) accounts and are subject to accounting and legal principles that govern it.
However, to really understand how your business is performing you need to prepare a fully detailed p & l account, this is an expanded version of the published accounts and usually has additional information such as ratio analysis and key performance indicators. Forex Ppt Basic Trading
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