Accounting Terms – Profit & Loss and Other Terms

Different fields of study make use of certain terms that are not easily understood by others. If you’re an accounting student or a professional accountant, you know the different terms used in accounting. One very popular term is profit & loss.

So, do you know what the term means? To start with, you have to determine what profit means. Profit can be referred to as net earnings or net income. Businesses can either sell services or even products. Profit will come from the sales of these services and products. If the costs of running a business are controlled, it can add up to the profits.

Profits are also called ROI or return on investment. However, this term is often limited to securities like bonds or stocks. But still, some companies use ROI to mean short or long term business outcomes. Taxable income is another term for profit.

The profit & loss of a certain company is determined by finance professionals through accounting. They can determine what created the profits as well as the losses. Accountants form some sort of business equation so justify the profits & losses of a business. By doing so, they can easily tell a company’s net worth.

It seems that by simply starting to define one accounting term, it eventually leads to defining other terms as well. Net worth is another term that is quite difficult to understand. It refers to the resulting amount after deducting the liabilities of a company from the assets. Private companies refer to net worth as owner’s equity.

Why owner’s equity? Well, after deducting all the liabilities, what’s left basically belongs to the owner. In the case of public companies, the profit of the business is returned as dividends to shareholders. As you can see, before owner or shareholders of a company can take hold of the profits, all liabilities must be deducted first.

Every business aims to get a good and positive figure because that would mean profit to them; if not, the business is at a loss. Societies and economies are built on profit. However, there are times when a certain business incurs losses. Consumer behaviors and economic trends change. Because of this fact, it is not possible to foresee the company’s future performance at all times.

How can you tell if a business is at a loss? That is understandable and even those who have no background in accounting know what it means. All liabilities will be deducted from the assets and if results to a negative amount, then the business is at a loss. The accounting staff of the company can still pursue effective measures to revive the business. If the business has efficient and effective accounting staffs, the business can improve in the near future.

It cannot be argued that an accounting staff is needed to ensure the company’s success. Without them, the success of the business is not guaranteed. So the owner of the business should choose the best accounting staff. That way, all the financial transactions and decisions are noted and studied. Only then can the company gain profits.

Profit & loss is just a simple accounting term. Aside from the term, you also learned about net earnings, net income, net worth, dividends, etc.

Making a Profit

Accountants are responsible for preparing three primary types of financial statements for a business. The income statement reports the profit-making activities of the business and the bottom-line profit or loss for a specified period. The balance sheets reports the financial position of the business at a specific point in time, ofteh the last day of the period. and the statement of cash flows reports how much cash was generated from profit what the business did with this money.

Everyone knows profit is a good thing. It's what our economy is founded on. It doesn't sound like such a big deal. Make more money than you spend to sell or manufacture products. But of course nothing's ever really simple, is it? A profit report, or net income statement first identifies the business and the time period that is being summarized in the report.

You read an income statement from the top line to the bottom line. Every step of the income statement reports the deduction of an expense. The income statement also reports changes in assets and liabilities as well, so that if there's a revenue increase, it's either because there's been an increase in assets or a decrease in a company's liabilities. If there's been an increase in the expense line, it's because there's been either a decrease in assets or an increase in liabilities.

Net worth is also referred to as owners' equity in the business. They're not exactly interchangeable. Net worth expresses the total of assets less the liabilities. Owners' equity refers to who owns the assets after the liabilities are satisfied.

These shifts in assets and liabilities are important to owners and executives of a business because it's their responsibility to manage and control such changes. Making a profit in a business involves several variable, not just increasing the amount of cash that flows through a company, but management of other assets as well.

Blogging for Profit Begins With a Long Term Plan

Many people dream of blogging for profit, and this goal

is not far beyond the reach of someone with average

intelligence, a willingness to work hard, and a basic

grasp of blogging technology. However, very few

people manage to reap the profits they want from their

blog. Most people who attempt to make money with

their blogs do not succeed for two reasons. Often,

bloggers have unrealistic expectations of how fast their

readership will grow and how much money they will

make, and when these expectations are not met the

disappointment can crush the desire to continue

blogging. The other trap that many bloggers fall into

has to do with lack of planning. If you want to turn a

profit as a blogger, the key to success is to make a

realistic plan and stick with it.

To succeed at blogging for profit, the main thing that

you will need is a large readership. The higher your

traffic, the more advertisers will agree to pay you.

However, cultivating the regular visitors that you will

need in order to make a profit isnt easy. As more and

more blogs appear each day, having a great idea or a

wonderful writing style is no longer enough to get

attention. You need to be able to market your blog

effectively.

Too many bloggers spend all of their time writing posts

and almost no time marketing their project. To be

certain, updating as often as you can is a great way to

keep your blog high on blogrolls and high in blog

search engines like technorati, and once your readers

know that you update frequently they will return to your

site on a regular basis. However, it does not matter how

often you update if nobody is reading your page, so dont

skimp on the time that you spend drawing visitors to

your site. To make your dreams of blogging for profit a

reality, try decreasing your number of posts and using

some of that time to draw new visitors by setting up

link exchanges with other bloggers, making contacts in

the blog community, and following other established

modes of winning traffic.

Of course, even if you are a marketing genius or have a

really great idea for a blog, success is not going to

happen overnight. Building the kind of readership that

blogging for profit requires takes time, and in all

likelihood it will be at least several months before you

are able to turn much of a profit. Try to stay committed

to your blogging project during this initial rough period.

To stay motivated, set goals for how often you will

update and how many readers you want to attract, and

then reward yourself for sticking with your plan.

Time Your Ebay Listings for Maximum Profit

When it comes to selling goods on Ebay, what you have and how you present it are two vital characteristics of successful auctions. Buyers like to know that they’re getting a good deal, and they like to know details about the merchandise they are paying for. But did you know that the timing of your Ebay auctions can also affect their success? It’s true. Real Ebay pros use timing strategies to maximize their profits, and you can, too.

Some sellers are discouraged when their auctions fail to get bids within the first few days of the listing. This is very common; most bids are placed in an auction’s final hours or even minutes. Buyers who have been watching the auction will try to place the winning bid just before time runs out, to cut down on competition. Since this is the case, Ebay sellers will benefit from making sure their auctions end during peak buying times.

When are Ebay’s peak buying times? According to the pros, daily purchases spike between 8 and 10PM Eastern Standard Time. Weekly sales reach their summit on Sunday evenings. If your auction closes during any of those time periods, your listing is more likely to be seen and bid on. If your auction closes in the wee hours of the morning, it’s unlikely that you will benefit from the last-minute buying scramble.

So how do you time your auctions to end when Ebay has the most visitors? Time your listings carefully. If you put up an item in a three day listing, the auction will end at the exact listing time, three days later. The same goes for other auctions of longer durations. For example, a seven day listing made at 8PM on Sunday evening will end at 8PM the following Sunday evening. It sounds simple, but careful auction timing is an oft-overlooked strategy that can drastically increase your sales on Ebay.

Also, consider the length of your listings. If you list an item for three days, you are shutting out thousands of potential bidders. You want to leave items up for as long as possible. Not only does this give buyers time to find and place bids on your merchandise, it also cuts down on listing fees. Why would you list an item for three days over and over again when you could just list it for seven or ten days from the beginning? Some types of merchandise, such as antiques and collectibles, can take a while to find purchasers. By listing them for three days, you’re losing out on lots of potential visibility. Increase the length of your auctions and increased profits will follow close behind. Items listed for a week or longer have time to attract plenty of auction watchers who could turn into bidders in the auction’s final moments.

Time your auctions for maximum visibility, and your profits will improve. You don’t want to lose out on sales because your auction ended at 3AM when nobody was looking! Close the bidding at a peak time to make the most of your Ebay business.

Business Blogging For Profit

Remember the old ways of keeping in touch with your clients? You usually patch them through telephone; fax machines, direct mail marketing, and even personal meetings.

But now, entrepreneurs are just smart enough to use the existing Internet technology to be regularly updated of the latest trends in business and at the same time keeping in touch with their clients. There is now text and voice chat, exchanges of e-mail, website forums, and others.

One of the most online business innovation ever made is the transformation of the regular blog posting into an online business tool. Before, blogging is just used for showing different thoughts and ideas. Some are just for fun, while others are for promotion of something that others think is beneficial to other Internet users. In other words, it is just a bunch of personal diaries and bulletin board for those people who want to share their knowledge and thoughts to others.

But think again, it is not just for diary writing or whatever. It is now a promotion tool you can use to boost your business. You can set up blogs in your website and have it with an associated RSS feed. In other words, you can constantly keep in touch with your clients and potential customers as well. In addition, you do not have to e-mail them—your blogs will be responsible in getting the latest news without actually having to visit your website.

From Regular Blogs to Business Blogs

From regular blogs that you post for nothing, now it is called the business blog that can help you save thousands of dollar and providing you great business opportunity with just one click. Not only it is free to use but also it is user-friendly, can be customized, and can be a flexible medium for circulating useful information for effective positioning of your products in the market.

There are some noted advantages of entrepreneurs who engage in business blogging. Here are some of these advantages:

· There are more than hundred thousands of blogs posted in the Internet. Statistics shows that there are currently 14 million blogs posted in the Internet with an estimated 80,000 more being added everyday. In addition, 30 percent of 50 million Internet users are blog readers. Just think of the number of possible audiences you can attract if you will advertise your product through blogs.

· Through blogs, you allow your clients to post their comments with regards to the product that you are offering. It can be of great help in improving your product through the suggestions that they will be posting. In addition, you can take immediate actions to your client’s concerns.

· Since blogs are quite popular to most Internet users, it can be of easy access to your customers. All they have to do is to access to a blogging community, and they can read your latest product offering. Remember that these customers are just willing to create “blogosphere” of comments regarding your product.

How to make your business blogs as effective as other means of Internet advertising? You can submit your blogs to any blog search sites and directories. It will be a wise move especially if your site is just newly-constructed.

Never forget to paste in your blogs the URL back to your site. Your blogs must contain not only the information with regards to your product but only but also exclusive background information. Remember that your customers do not want to see pure figures—they also want context information.

Business blogs provides you marketing possibilities of your product. Maybe your potential clients are just around the corner waiting for you to post your business blog.

Make shot glass candles for fun and profit

Shot glasses...

You could see these things in drinking places, poured with liquor being shared by fun-loving people. This is of course an instant when a single shot glass means a lot. Have you ever wondered about the other benefits of just a shot glass? Well, there is one exciting and very useful innovation with a shot glass, which is using them to make candles. Yes, we call hem shot glass candles.

Shot glass candles are really artistic and they could be very useful for the home and whatever place you think you would need them, not as mere light source but as well as having decorative purposes.

You could make our own shot glass candles. The steps to make are easy and economical. Out of these easy steps and with a small sum of money, you would be able to start a good hobby, a good small business and a good polish for our creativity. This is also a means of recycling or re-using old candles.

• Cut old candles into pieces and place these pieces in a container. When you want to use a certain color, you could use uncolored wax for your convenience.

• Place the container into another container of boiling water. Wait until the candle pieces melt.

• When you see that the wax has melted, his is the right time o put some dye for color.

• Prepare your wicks. Cut them as they fit to the shot glasses.

• Place these wicks to the shot glasses.

• Pour the wax into the shot glasses but make sure that it does not submerge the entire length of the wick.

• When the wax has nearly set, you see to it that you adjust the wick to the center of the shot glass. Leave the shot glasses in order for the wax to completely set.

These are so simple steps to follow, make sure also that when you choose shot glasses for candle making, and choose the thicker ones for they are much safer. For wicks, you could tie it around a toothpick before letting it lay in a shot glass. Remember to cut ¼ of it before lighting it up.

Work Your Hidden Profit Potential.

Direct marketing campaigns are truly effective when you precisely target customers likely to buy from you. This is done by Profiling and Modeling prospects and clients.

Dumb mass mailings are replaced with “surgical” campaigns that market to specific customers with accuracy using technology that is now available. Today, it’s possible to collect an enormous amount of information about customers, but to use it effectively you use it in “profiling” and “modeling”.

Both of these techniques are ways of applying external data to possible clients. They can be used to prospect for business or to zero-in on existing customers for your mailing. The goal is to predict behavior based on what you know about your customers.

These two methods are not mutually exclusive, and marketers often use them together. The difference is that profiling data is overlaid against an existing client database, and has a long life span. It can be used for several mailings, and in contrast modeling is used to sharpen the focus of a specific mailing.

In profiling start with the premise that you don’t want to deal with a customer segment, but rather an individual customer. Break up your client segment into clients who share similar tastes and buying habits. Then use demographic and behavioral information to create a useful snapshot of the customer.

Begin to gather this information from your existing customer database noting such things as frequency of purchases, buying habits, responses to marketing offers, and repeat purchases. Then start with your perceived prospects using alternate sources of data from purchased sources. Use all this data to break your customers into clusters that share purchasing traits.

Obviously, profiling and modeling add to the cost of your mailing project. You may wonder why you shouldn’t just stick to the old method of “recency-frequency-monetary” (RFM) analysis. The reason is that for RFM to work effectively you need data on the client’s purchasing habits, and that’s the rub! It only works for your existing customer and is of no use in finding potential clients.

What makes profiling/modeling cost effective is found in three current trends.

1. Rising mailing costs.

2. Computers able to compute mountains of data rapidly.

3. Higher quality customer data available.

In the past, direct marketers could mail out 400,000 mailings to find a strong market of 40,000 (1 customer out of 10 mailings was average). The dramatic increase in the cost of paper and postage has made this practice prohibitively expensive.

Computers today are capable of doing millions of computations per second. This makes analyzing mountains of data possible and not unthinkable anymore.

Higher quality customer data is more available today, and there are more sources available for obtaining it than ever before.

The result is that you can afford to do a lot of number-crunching before you spend a penny on postage. You can also weed out the useless names and mail only to your most likely prospects.

There are 6 factors to consider when building customer profiles:

• Affinity profiling – analyzes current buying habits to better match customer to product. Knowing what kinds of product a particular customer is buying gives you the ability to build an “affinity matrix” showing what related products would stimulate more sales from him/her.

• Demographic and psychographic data is also used for profiling. Demographics tells you a client is a 29-year-old, unmarried, male who earns $45,000 and drives a 2-year old Lexus. Psychographic data suggests that single young men who buy status-symbol cars are excellent prospects for other highly visible status products. Combining the two types of data yields a customer profile to someone marketing, say, the latest cellular phone.

• Lifestyle Coding is used to enhance basic demographic information. Simply put – people in certain demographic categories will likely have similar hobbies and other interests.

• Mapping is another useful tool in building customer profiles. Census data, topographic information, geographic coordinates, and zip code+4 postal data can be fed into a computer yielding maps that can be color coded to certain characteristics of consumers in particular neighborhoods.

• Cluster Coding is a popular means of grouping people by lifestyle characteristics. Remember hearing the terms “Urban Up-and-Comers, Settled In, and White Picket Fence” used to describe market segments? These are known as “clusters”, each given a score according to affluence, social position, activities, and aspirations.

• Survey data – can be used to enhance demographic, lifestyle, and other data to build a profile. This is collected directly from your customers via application forms, surveys, and credit histories. This provides a more personal portrait of the customer than merely census or demographic data.

The Direct Marketer of today has become more of a “surgeon” than a “shotgun hunter”. It’s no longer cost-effective to shoot at 400,000 prospects to get 40,000 clients, and with computers it’s easier to slice-and-dice data today.

Profit and Loss

It might seem like a no-brainer to define just exactly what profit and loss are. But of course these have definitions like everything else. Profit can be called different things, for a start. It's sometimes called net income or net earnings. Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income.

It's the job of the accounting and finance professionals to assess the profits and losses of a company. They have to know what created both and what the results of both sides of the business equation are. They determine what the net worth of a company is. Net worth is the resulting dollar amount from deducting a company's liabilities from its assets. In a privately held company, this is also called owner's equity, since anything that's left over after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is returned to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that's left over is profit. It's not derived from one element or another. Net worth is determined after all the liabilities are deducted from all the assets, including cash and property.

Showing a profit, or a positive figure on the balance sheet, is of course the aim of every business. It's what our economy and society are built on. It doesn't always work out that way. Economic trends and consumer behaviors change and it's not always possible to predict these and what income they'll have on a company's performance.