The summary of every accounting period is done by preparing a TRADING, PROFIT AND LOSS ACCOUNT commonly known as TPL.
A TPL is prepared to help determine the NET PROFIT of every business.
A TPL is prepared by first preparing a TRADING ACCOUNT. At this point one one compares COST OF GOODS SOLD & NET SALES to get GROSS PROFIT. ie NET SALE-COST OF GOODS SOLD= NET PROFIT.
Then proceed to PROFIT AND LOSS ACCOUNT. Here you compare INCOME & EXPENSES ie. TOTAL INCOME -TOTAL EXPENSES= NET PROFIT. NB: If expenses are more than income hence you get a NET LOSS .
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TR ROZIE IRERI