Bookkeeping All-in-One For Dummies, 2nd Edition

Chapter 2

Reporting Profit

IN THIS CHAPTER

Taking a look at typical income statements

Getting inquisitive about the substance of profit

Becoming more intimate with assets and liabilities

Handling unusual gains and losses in the income statement

Correcting misconceptions about profit

This chapter lifts the hood and to show you how the profit engine runs. Making a profit is, of course, the main financial goal of a business. (Not-for-profit organizations and government entities don’t aim to make profit, but they should at least break even and avoid a deficit.) Measuring profit is a challenge. Determining the correct amounts for revenue and expenses to record is no walk in the park.

Managers have the demanding tasks of making sales and controlling expenses, and accountants have the tough job of measuring revenue and expenses, as well as preparing financial reports that summarize the profit-making activities. Also, accountants are called on to help business managers analyze profit for ...