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profit and loss account formats


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The four formats given for profit and loss accounts by the Companies Act: vertical format, analysing costs by type of operation and function; vertical format, analysing costs by items of expense; horizontal format, analysing costs by type of operation or function; horizontal format, analysing costs by items of expense.

vertical format, analysing costs by type of operation and function;

vertical format, analysing costs by items of expense;

horizontal format, analysing costs by type of operation or function;

horizontal format, analysing costs by items of expense.

The following three items must be disclosed on the face of the profit and loss account irrespective of which format is selected:(1) profit or loss on ordinary activities before taxation; (2) any amount set aside or proposed to be set aside to, or withdrawn or proposed to be withdrawn from, reserves; (3) the aggregate amount of dividends paid and proposed.

(1) profit or loss on ordinary activities before taxation; (2) any amount set aside or proposed to be set aside to, or withdrawn or proposed to be withdrawn from, reserves; (3) the aggregate amount of dividends paid and proposed.

*Financial Reporting Standard 3, Reporting Financial Performance, issued in October 1992, developed the basic formats given in the Companies Act by adopting a layered format requiring the following additional components to be shown: the results of continuing operations, including the results of any acquisitions; the results of discontinued operations; profits and losses on the sale or termination of an operation, costs of fundamental reorganization or restructuring, and profits or losses on the disposal of fixed assets; any extraordinary items.

the results of continuing operations, including the results of any acquisitions;

the results of discontinued operations;

profits and losses on the sale or termination of an operation, costs of fundamental reorganization or restructuring, and profits or losses on the disposal of fixed assets;

any extraordinary items.

Other countries allow different formats and this makes comparability difficult. Even if all countries were to adopt the same format, there would probably still be problems with the precise definition of terms.

Subjects: Accounting.


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