Profit and Loss
Other Considerations
Appropriation
Appropriation is the dividing up of the profit after tax. It is important to ensure that appropriations are not classed as an expense, unlike interest which is an expense. It is a bad mistake to make.
Valuing stock
Two general principles which can be utilised include: FIFO (First in - First out)
This assumes that the goods purchased first are sold first. This is a very commonly applied principle and has much to commend it. It does matter because over a period of time goods have probably been purchased at different prices.
LIFO (Last in - First out)
This is the opposite to FIFO and assumes that the most recent purchases are sold first.
Video Spotlight: Profit & Loss Basics (Heelan Associates)
“If you don't know your numbers, you don't know your business” Marcus Lemonis
Future Practice Owner.
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