Business english
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
the profit on ordinary activities before tax of pre-tax profit. Exceptional items are to report, for example the
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