‘What is profit?

’
Revenue isthe gross inflow of economic benefits during the period
arising in the course of the ordinary activities of an entity when
those inflows result in increases in equity, other than increases
relating to contributions from equity participants.(IAS 18)

 simply a measure of the inflow of assets(such as cash )or the

reduction in liabilities that arise as a result of trading operations .
 Some examples of the different forms that revenue can take are as
follows:
 Sales of goods (for example , of manufacturer)
 Fees for services (for example ,of a solicitor)
 Subscriptions (for example ,of a club)
 Interest received (for example of an investment fund)
 expense represents the outflow of assets (or increase
in liabilities )that is incurred as a result of generating
revenues.

 Examples of some of the more common types of

expenses are:
 Cost of sales
 Salaries and wages
 Rent and rates
 Insurances
 Printing
 Heat and light
 Telephone and postage
• The difference between the total
revenue and total expenses will
represent either:

profit (if revenues exceed expenses)

Or
loss (if expenses exceed revenues)
- Costs represent the resources that
have to be sacrificed achieve a
business objective ,the objective
may be to make a particular
product , to render particulate
service.
 Costs classified as:
I. Fixed costs: means that the cost stay fixed(the
same) when changes occur to the volume of activity,
Ex : rent.
II. Variable costs: are costs that vary with the level of
activity, Ex :raw materials.
III.Semi_fixed(semi_variable)costs:
some of this will be for heating and lighting and
this is probably fixed ,at least until the volume of
activity expands to a point where longer opening
hours or larger premises are necessary.
 Exampel: In the morning your company purchased
about 125% of the paper goods that you believe will be
used at the event. (You purchased the additional 25%
for future events and also to ensure you don’t run out
of these items at this evening’s event.) The paper
goods that were purchased had a cost of $500, and
only $400 of the paper items were used at today’s
event. The remaining $100 were put in your company’s
store room for use at the events to be catered in the
next few weeks. In this example, the cost of $500
consisted of a $400 expense and a $100 asset .
Accountants use the term expense
to mean a cost that has being used up
while a company is doing its main revenue-
generating activities. (That’s why only $400 of
the cost of supplies was expensed in our
example.)

A cost may or may not be an expense. As we

had seen above, $400 of the cost was an
expense and $100 of the cost was an asset
 
profit: Income derived from the regular
business activity, by caplital labour and
time.
In other words it is:
the return on the capital employed
after deducting all working capital and
fixed expenses.
Gain: Income derived on investment
over a period of time, not falling under
regular business activity.
it is the return derived on investment.
When there are any questions, please send it to:

Hazem_awadat@yahoo.com