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PROFIT
CONTENT
- Meaning of Profit
- Types of Profit
- Calculation of Gross Profit and Net Profit
- Uses of Trading, Profit and Loss Account
- Factors Affecting Profit
- Percentage of Gross Profit or Net Profit to Turnover
Meaning of Profit
Profit is the financial benefits or gains which accrue to a businessman. The purpose of a business organization is to make profit. It represents the gain, resulting from investing one’s capital in a business enterprise.
An accountant defines profit as the excess of income over expenditure. The accountants view profit from two perspectives; gross and net profits.
To an economist, profit represents the reward of an entrepreneur. It is measured as business performance and means of rewarding business managers or owners for making risk.
EVALUATION
- Define the term ‘profit’.
The Types of Profit
There are two types of profit namely; gross profit and net profit.
(a) Gross Profit: Gross profit is the excess of turnover over the cost of goods sold.
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