Profit and Loss account and Trade finance: Difference between pages

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''Financial reporting''.
''Trade finance - international trade.''


(P&L or PL or PNL).
Trade finance and international trade financing include the use of open account, export credit insurance, guarantees, [[supplier credit]]s, [[buyer credit]]s, and the use of different price bases and terms ('[[incoterms]]').  


Trade finance also incorporates instruments and [[documentary credit]]s such as letters of credit, [[acceptance]]s, bills, and evidentiary documents such as bills of lading.


1. ''Primary financial statements.''
The scope of trade finance extends through domestic trade financing, [[supply chain finance]] and electronic systems, as well as the areas outlined above.


A profit and loss account is a primary financial statement, also known as an ''income statement'', ''statement of profit or loss'' or ''statement of operations''.


It shows the revenues earned in a period, matched with the expenditures incurred in the same period, to arrive at a figure of net profit or loss ''for that period''.
:<span style="color:#4B0082">'''''Buyers' concerns - sellers' concerns'''''</span>


:In any transaction, there is a level of risk for both the buyer and the seller. The buyer's primary concern is the quality and timing of the goods received. The seller, on the other hand, is mostly concerned about getting paid.


Under the 'double entry' accounting convention, income items in the Profit and loss account are Credits (CR) and expenses are Debits (DR).
:In order to ensure that each party to a trade has their objectives met, and to avoid business grinding to a halt, a series of risk management tools have been developed to enable transactions to be settled in good order.


:A net profit is a Credit in the Profit and loss account.
:These tools are referred to collectively as trade finance solutions, and the payment terms inherent in the various products provide more or less protection to one other party in the transaction.


:A net loss is a Debit in the Profit and loss account.
:''Sarah Boyce, Associate Director of Education, ACT, The Treasurer, July 2015, p43.''
 
 
Under International Accounting Standards, the profit and loss account is superseded by the ''Statement of profit or loss and other comprehensive income''.
 
 
2. ''Balance sheet account - reserves.''
 
The profit and loss account is also another name for the ''Profit and Loss reserve'' in the balance sheet.
 
Like all other accounts in the balance sheet, this shows the cumulative position, incorporating ''all'' periods from the establishment of the entity up to the balance sheet date.
 
 
Net profits or losses <u>for the single period</u> in the primary statement feed through in turn to the Shareholders' funds (<u>cumulative</u> retained profits or losses) in the 'bottom half' - reserves section - of the Balance sheet (as <u>at the end of the period</u>).




== See also ==
== See also ==
* [[Accruals concept]]
* [[Bank payment obligation]]
* [[Attributable profit]]
* [[Bill]]
* [[Balance sheet]]
* [[Bill of lading]]
* [[Cash flow statement]]
* [[Buyer credit]]
* [[Credit balance]]
* [[C2C]]
* [[Debit balance]]
* [[CIF]]
* [[Environmental profit and loss]]
* [[COD]]
* [[Financial reporting]]
* [[Department for Business and Trade]] (DBT)
* [[Financial statements]]
* [[Documentary credit]]
* [[Income statement]]
* [[Documentary trade]]
* [[International Accounting Standards]]
* [[Export credit agency]]
* [[Loss]]
* [[Export Credits Guarantee Department]]
* [[Primary statements]]
* [[FECMA]]
* [[Profit]]
* [[Finance]]
* [[Profit and Loss reserve]]
* [[Freight]]
* [[Statement of changes in equity]]
* [[ICTF]]
* [[Statement of comprehensive income]]
* [[International trade]]
* [[Statement of profit or loss and other comprehensive income]]
* [[Letter of credit]]
* [[Logistics]]
* [[Open account]]
* [[P2P]]
* [[Supplier credit]]
* [[Supply chain finance]]
* [[Trade]]
* [[Trade acceptance]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Trade_finance]]

Revision as of 19:13, 3 October 2023

Trade finance - international trade.

Trade finance and international trade financing include the use of open account, export credit insurance, guarantees, supplier credits, buyer credits, and the use of different price bases and terms ('incoterms').

Trade finance also incorporates instruments and documentary credits such as letters of credit, acceptances, bills, and evidentiary documents such as bills of lading.

The scope of trade finance extends through domestic trade financing, supply chain finance and electronic systems, as well as the areas outlined above.


Buyers' concerns - sellers' concerns
In any transaction, there is a level of risk for both the buyer and the seller. The buyer's primary concern is the quality and timing of the goods received. The seller, on the other hand, is mostly concerned about getting paid.
In order to ensure that each party to a trade has their objectives met, and to avoid business grinding to a halt, a series of risk management tools have been developed to enable transactions to be settled in good order.
These tools are referred to collectively as trade finance solutions, and the payment terms inherent in the various products provide more or less protection to one other party in the transaction.
Sarah Boyce, Associate Director of Education, ACT, The Treasurer, July 2015, p43.


See also

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