Profit and Loss Statement Accounting Terms[MIGRATED]

Revenue (Income)
Revenue is the gross increase in owner's equity resulting from the operations and other activities of the business. It is calculated by multiplying the price of goods or services are sold by quantity.

Expenses (Cost)
Expenses are money spent resulting from the cost of goods, fixed assets, services and supplies consumed in the operations of a business that are tax-deductible and reduce taxable income. Expenses include payments to suppliers, employee wages, factory leases and depreciation.

Draw decreases owner's equity resulting from withdrawal made by the owner. It refers to the amount the owner withdraw from the business either in the form of goods, cash or assets for living and personal expenses.

Type of Expenses

  • Supplies - Expenditures for incidental materials needed in the conduct of business, such as office supplies.
  • Salaries - Expenditures for work performed by employees.
  • Payroll Taxes - Expenditures for taxes based on wages paid to employees.
  • Advertising - Promotional expenditures, such as newspaper, handbills, television, radio and mail.
  • Utilities - Expenditures for basic services needed to function in the modern world such as water, sewer, gas, electricity and telephone. Most business track the amount spent for each type of utility services.
  • Building Rental - Expenditures paid to an owner of property (building) for use of the property. A rental called a lease contains the terms.
  • Maintenance & Repairs - Expenditures paid to repair or maintain building or equipment.
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