Making a profit is a prerequisite and the goal of all business activities of each economic structure. With the help of profit (profitability), the entire management efficiency is evaluated. It is the main source of funding for social and economic development.
Currently, profit has acquired an important, leading role in the new financial and economic mechanism for managing economic and social development. It is nothing but the basis of financial stability, as well as the full provision of income of the state, population and enterprise. In addition, there are various types of profit, it performs its functions and plays a special role in the activities of any enterprise.
Before you understand what the nature and types of profits of the enterprise, it is necessary to understand that it has an important property - to reflect the final result of extensive and intensive development. In addition, profit is a criterion for the effectiveness of reproduction, it is an indicator with two boundaries: cost and volume of production of services or products (sales).
In its economic content, profit expresses in money terms a part of the value of the surplus product. It performs a number of functions. These include stimulatory, reproductive and control functions.
In order to determine financial results, it is necessary to use the accrual method. That is why the profit or loss that is shown in the financial statements simply does not reflect the actual cash inflow of any enterprise, as a result of its business activities. So, in order to restore the real picture by the magnitude of financial results, which are an increase or decrease in the cost of its capital, additional financial calculations are needed.
The financial results of the activities of a particular company on the account of losses and profits are always reflected in two forms: 1. As a result of the sale of works, products, materials, services and other property, it can be previously identified on the sales accounts. 2. As a result that is not related to the implementation process. It is also called non-operating income and loss.
There are different types of profits. They all differ from each other and those who want to engage in entrepreneurial activity are required to understand them. Currently, these types of profits are distinguished:
1. Balance sheet profit or loss is the amount of profit or loss received from the sale of financial activities, products, income from other non-operating transactions, and they are reduced by the sum of all expenses related to these operations.
2. Profit from ordinary activities or from the sale of works, services, products. It is the difference between the entire proceeds from the sale of products at current prices without special taxes, excise taxes, VAT and the cost of producing and selling it.
3. The profit or loss from financial activities and from other non-operating transactions is the result of operations that are recorded in account 47 under the name “Sale and other disposal of fixed assets” and account 48 under the name “Sale of other assets”, and also the difference between the amount interest and fines received, fines, penalties, interest, interest, exchange differences on all foreign currency accounts, past losses and profits that were identified in the reporting year and so on.
4. Taxable profit is the difference between the book profit and the sum of rental payments, income taxes, import and export tax.
5. Types of profit continues to net profit, which is directed to social, industrial development, the creation of reserve funds, material incentives for all employees, the payment of various economic sanctions to the budget, charity and so on.
6. And finally, consolidated profit, summarized throughout the financial statements on the activities and, in addition, the financial results of subsidiaries and parent companies.