Entrepreneurship

Prepared by: Group 1

 What is Profit and Loss?
A person engages in business primarily for
profit or return on investments.

Profit is the difference between the amount

invested and the monetary gain from the
investment. There are cases when losses are
increased in business instead of realizing the
desired profit.

Loss is the deduction in the value of

investments.
The Income Statement is the financial statement that shows if a business is earning a profit or
incurring a loss.
terms and formulas:

GROSS-means the total amount

without any deductions.
NET is the remaining amount after
the deductions.
NET SALES are obtained when refunds are deducted from the gross sales.
RETURNS, ALLOWANCES, and DISCOUNTS- are payments made to customers for returned merchandise,
defective goods and for pricing adjustments.
Gross profit = Net Sales - Cost of goods sold
Net Sales = Gross sales - Refund and allowances
Net Profit = Gross profit - Operating expenses
The Cost of Goods Sold or Buying price-refers to the actual amount paid for articles bought including the
buying expenses.
The Inventory is an itemized list of goods at hand.
 terms and formulas:

The Operating or Expenses Overhead are the expenses incurred during the selling of the
product such as wages or salaries, water and electric bills, rental, transportation, and
commissions.

Formulas:
Available Goods = Beginning Inventory + Purchases
Cost of Goods Sold = Available Goods - Ending Inventory

There are cases when losses are increased in business instead of realizing the desired profit.
LOSS is the deduction in the value of investments.
 To understand more of these formulas,
let's apply them in these examples

1. On May 1, the merchandise inventory of Kesten Tires and

Battery Supply was P165,256.13 and its purchases after sounted
to P110,901.45. On July 31, The store inventory was P98,542.63.
How much goods were sold?

Solution:
Beginning Inventory P 165,256.13
+
Add Purchase P 110,901.15
Goods for Sale =P 276,157.58
-
Less Ending Inventory P 98, 5422.63
Cost of Goods Sold = P 177.611.95
Quiz Time!
 Match me!
• is an itemized list of goods at hand.
• is the deduction in the value of investments. A. Income Statement
• is the difference between the amount invested and
B. Gross
the monetary gain from the investment.
C. Net
• refers to the actual amount paid for articles bought
D. Net Sales
including the buying expenses.
• Gross sales - Refund and allowances. E. Gross profit
• Net Sales - Cost of goods sold F. Net Sales
• Gross sales - Refund and allowances G. Cost of Goods Sold or Buying price
• is the remaining amount after the deductions. H. Profit
• means the total amount without any deductions. I. Loss
• is the financial statement that shows if a business is J. Inventory
earning a profit or incurring a loss.
Thank you
very much!
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