Profit and Loss account and Proprietary trading: Difference between pages

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''Financial reporting''.
Trading by a financial institution on its own behalf, rather than acting primarily as an intermediary.


(P&L or PL or PNL).


It is potentially highly profitable, but also risky.


1.  
Prudential regulations restrict the amount of proprietary trading that banks are allowed to do, in order to reduce the risk.


Historically, a primary financial statement – showing 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.


Under the 'double entry' accounting convention, income items in the Profit and loss account are Credits (CR) and expenses are Debits (DR).
Sometimes abbreviated to 'prop' trading.
 
A net profit is a Credit in the Profit and loss account.
 
A net loss is a Debit in the Profit and loss account.
 
 
Under International Accounting Standards the profit and loss account is superseded by the Statement of profit or loss and other comprehensive income.
 
 
2.
 
Historically, another name for the Profit and Loss reserve in the balance sheet.
 
Net profits or losses <u>for the period</u> in the Profit and loss account 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]]
* [[Attributable profit]]
* [[Capital]]
* [[Balance sheet]]
* [[Commercial bank]]
* [[Cashflow statement]]
* [[Investment bank]]
* [[Credit balance]]
* [[Merchant bank]]
* [[Debit balance]]
* [[Primary market]]
* [[Financial reporting]]
* [[Proprietary]]
* [[Financial statements]]
* [[Prudential]]
* [[Income statement]]
* [[Secondary market]]
* [[International Accounting Standards]]
* [[Security]]
* [[Loss]]
* [[Profit]]
* [[Profit and Loss reserve]]
* [[Statement of profit or loss and other comprehensive income]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Revision as of 16:10, 26 May 2020

Trading by a financial institution on its own behalf, rather than acting primarily as an intermediary.


It is potentially highly profitable, but also risky.

Prudential regulations restrict the amount of proprietary trading that banks are allowed to do, in order to reduce the risk.


Sometimes abbreviated to 'prop' trading.


See also

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