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Introduction to bookkeeping and accounting
Introduction to bookkeeping and accounting

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3 Double entry and the profit and loss account

Section learning outcomes

By the end of this section you should be able to:

  • understand the difference between generating cash and making a profit
  • understand how profit relates to owner's capital in the balance sheet and the accounting equation
  • understand what the profit and loss account is
  • measure profit and loss
  • account for closing stock
  • state the double-entry rules for income accounts and expense accounts.