The document discusses key financial statements including the profit and loss statement and balance sheet. It explains that a profit and loss or income statement records a company's earnings and expenses over a period of time, usually a financial year, and measures profitability. The bottom line refers to the profit or loss made, while the top line refers to revenue. Components of the profit and loss statement include sales, cost of goods sold, expenses, depreciation, interest, taxes, and ultimately profit after tax.

2.  Profit and Loss Statement
 Balance Sheet
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3. At the end of this session you will be able to…
 Apply the basic concepts of Financial Management to
various business practices.
 Describe the components of Profit and Loss Statement.
 Explicate components of Balance sheet.
 Differentiate between Assets and Liabilities.
 Analyze the Financial Numbers of the Company based
on the provided report.
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5. A Company's Profit and Loss or Income
Statement is a record of its earnings or
losses for a given period.
It reflects the amount the Company
earned (revenues) and the amount a
Company spent (expenses) during this
period.
It measures the profitability of the
Company over a period of time, which
is generally a financial year.
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6. In the Income Statement the
Bottom Line refers to the
made for the
period under consideration
and the top line refers to
.
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7. All and are
the components of Profit and Loss Account.
A profit and loss statement is based on
two basic equations:
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8. A Typical Profit and Loss Statement would look like-
Sales
Less: Sales Returns
Less: Cost of Goods Sold
Gross Profit
Less:
Administrative Expenses
Sales and Advertisement Expenses
Earnings before Depreciation Tax and Interest
Less: Depreciation
Interest
Profits before Tax
Less: Tax expenses
Profit after Tax
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