There is a common belief that accountant is one who pay and send out the bills that keep the business running. Accountants are not confined only to this. They also keep financial records on profits, costs and losses of business. Even they are referred as “bean counters” Bean counters are none other that accountants who are believed to place undue emphasis on the control of expenditures. You can come to know the profit of being accountant only if you have your own business.

Even if you balance a checkbook despite what type of business you are in, that's still called as accounting. It's part of even a kid's life. Saving an allowance, squandering it all at once - these are accounting principles.

While defining what profit and loss are, every one will come up with their own meanings. As all other accounting terms has its own definitions,the term profit and loss too has its own meanings. To start with, profit can be called in different ways. Sometimes net income or net earnings are called profits. Businesses that sell products and services generate profits from controlling the attendant costs of running the business and from the sales of the products or services. ROI or Return on Investment can also be referred to as Profit. These terms are used by many companies to refer to short-term and long-term business results. But, companies such as stocks and bonds limit ROI to profit on investments only. Taxable income is sometimes called as Profit.

It's the job of the accounting and finance professionals to review the profits and losses of a company. They have to know what produced both and what the results of both sides of the business equation are. They find out what the net worth of a company is. Net worth is the resulting dollar amount from subtracting a company's liabilities from its assets. In a privately held company, this is also called owner's equity, as anything that is available after all the bills are paid, to put it simply, belongs to the owners. In a publicly held company, this profit is given back to the shareholders in the form of dividends. In other words, all liabilities have the first claim on any money the company makes. Anything that's left over is profit. It's not derived from one factor or another. Net worth is determined after all the liabilities are subtracted from all the assets, as well as money and property.

 In every business profits can be derived from several different areas. It may be a little complicated because business run on credit as well. In many businesses products are sold in credit to the customers. In order to record the total amount owed to the business by its customers who have not paid the balance in full yet, the accountants use an asset account called accounts receivable. If the credit sale has taken place by the end of the accounting period then a business cannot collect all its receivables in full by the end of the financial year.

 The accountant records the sales income and the price of goods sold for these sales in the year in which the sales were made and the products distributed to the customer. This is called accrual based accounting, which records revenue when sales are made and records everyday expenditure when they're incurred as well. When sales are made on credit, the accounts receivable asset account is increased. When cash is received from the customer, then the cash account is enhanced and the accounts receivable account is reduced.

The price of goods sold is one of the key expenses of businesses that sell goods, products or services. Even a service engrosses expenses. It precisely states that it's the cost that a business pays for the product it sells to customers. A business makes its profit by selling its products at prices soaring adequate to cover the cost of producing them, the costs of running the business, the interest on any money they've borrowed and income taxes, with money leftover for profit.

When the business obtains products, the price of them goes into so called inventory asset account. The price is subtracted from the cash account, or added to the accounts payable liability account, depending on whether the business has paid with cash or credit.