Profit is the difference between all expenses and income received. It characterizes the level of efficiency of the enterprise. Accounting for the formation and distribution of profits is reflected in the balance sheet. But in the forms of balance, several of its varieties are distinguished:
1. Gross profit, it is calculated as sales revenue - production costs (cost).
2. Sales Profit - Calculated as Gross Profit - Management Expenses.
3. Profit before tax. It is formed by the difference of the previous indicator with other income and expenses.
4. Net profit. This is the type of business income that remains after paying all taxes.
The amount of profit directly depends on the amount of proceeds from the sale and the cost of production. But this is an accounting definition of profit, there is also an economic one. According to him, the profit depends on the size of the entrepreneurial risk, and the higher it is, the more likely it is to double the profit.
Its value is influenced not only by prices for raw materials and materials, but also by the state of the market. If an enterprise sells innovative products that have no competitors, the profit will be higher.
The distribution of profits is carried out evenly to replenish funds and for production purposes. The net profit of the organization is spent to develop production and encourage the team. Also, the distribution and use of the organization's profits is carried out along the following branches:
1. Buying new equipment or refurbishing an existing one.
2. Increasing own working capital, which are lost as a result of inflation.
3. Repayment of loans or payment of interest on them.
4. Protecting the environment from pollution.
5. Staff bonuses.
Thus, the distribution of profits is carried out in two directions:
- For accumulation, i.e. increasing part of the property,
- For consumption. Launching on a new circle of funds for further receipt.
At the same time, the accumulated part of the profit does not have to be spent in the next reporting period. It can be left until the organization, for one reason or another, begins to incur losses. Then the funded part will go to cover the losses. Profit attributable to accumulation is the result of a business operating successfully and financially independent.
If we consider the stocksociety, then the distribution of profits to funds covers the definition of the owner of the fund, which can also be different. The consumption fund is in the hands of the labor collective (but even if it is not, it is distributed according to the needs of the employees). Therefore, these funds do not belong to the capital of the enterprise. And accumulation funds are the property of shareholders and founders. The free part of the profit, as a rule, is added to the authorized capital.
Proper distribution of profits guarantees the company's financial stability in the market and expansion of its business scope.
