Business english
However, poor resultsoftencause a
dropinshareprice, asinvestors feel thecompanyisovervalued. Accrualsprincipleormethodmeansthateventsin a
particularreportingperiod, are recordedinthatperiod, ratherthanwhenmoneyisactuallyreceivedor paid out,
whichmayhappenin a laterperiod.TheP&L account(incomestatement in USA) recordstheprofitorthe loss
during a particularreportingperiodusingtheaccrualsprinciple.We show thecost of goodsold(COGS),
forexamplelabor costs cost of employeessalaries and thecost of materials.General expenses
thecostsrelatedtomakingthesesalessuchassalespeoplessalaries, rent forbuildings, etc. A cost of depreciation
thisisnotanactualsum of money paid out, butis showni theaccountstoallowforthewaythatequipmentwearsout and
declinesinvalueovertime and willhavetobereplaced. Thisleavesuswithouroperatingprofit.
Thenwesubtracttheinterestpayable on money we have borrowed in the form of bonds and bank loans. This gives
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