One would say it is simply total revenue minus total expenses. But this is just the beginning.
Firstly we need to reflect on a major question:
Are we referring to accounting profits or taxable profits?
And then the usual question pops up:
What do you mean? Are the two figures different?
Of course, they are different!
Accountants have more than one set of rules that they are required to comply with depending on the type of the business and the recipient of the figures. There are financial reporting standards, the tax legislation, the regulatory rules etc. all producing a result (profit/loss/zero) but following different rules and under different scope.
At Quantum BITS our vision is to be a 360 accelerator for sustainable business and that’s why we love creating informed entrepreneurs! Contact our Accounting & Finance team to learn more.