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Get Started in Shares by Glen Arnold

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Profit and loss account

The profit and loss account (also called an income statement) records whether the company’s sales revenue was greater than its costs. It allows you to compare the latest profit with previous years’ profits, or with other companies.

Figure 11.1 shows the profit and loss account for our corner shop business last year. Alongside are the income and expenses for the previous year to allow comparison.

The layout and terminology may change from one company to another, but the illustration captures the key figures you are likely to come across. The ‘Notes’ column points out where in the notes to the accounts to look for more detailed information about a particular item – laid out later in the annual report. Brackets are placed ...

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