Concepts & P&L

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:32AM in AAT student discussion
I am stuck on why the net profit does not represent the bank balance etc and what accounting comcept this relates to. any help you be appreciated thank you

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Concepts & P&L

    Hi
    The net profit shows how much profit you have made at a certain point in time. You are comparing the income and expenditure for that trading period and not including any profits or losses from previous years. The bank balance is historic and cumulative and therefore reflects all that has gone on within the business past and present.

    Best wishes
    Eva :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Concepts & P&L

    I would say that the concept that this represents is the accruals concept.

    Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Concepts & P&L

    Thanks for your help most appreciated

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