How is Profit Measured? Term Paper by Kien

How is Profit Measured?
This paper examines the measurement of profit and its uses in the organization.
# 153553 | 1,274 words | 10 sources | APA | 2013 | KE

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This paper examines the measurement of profits in an organization and looks at how the monthly cash flow report is used in small businesses and more comprehensive income statements are used for large business organizations. The paper relates that profit measurement may be undertaken by the owners of small firms while accountants and other financial experts are employed in large profit oriented organizations. The paper discusses the productive inputs to profit generation and describes how financial reports help in establishing the performance and trends of a business in terms of profits.

Profits Measurement
Inputs for Profit
Source of Profits

From the Paper:

"Profit measurement in a business organization can be understood as the assessment of the entire costs against the realized total sales from a business undertaking. Profit measurement as an activity is undertaken by the accounting personnel in a business establishment (Jarvis, Berry, & Jarvis, 2005). These accountants are mostly found in well established organizations and their skills in financial computations tend to be diverse and varied. In small scale and middle sized firms this exercise may be unsystematically carried out by the business owners. Nevertheless, the procedure involved in determining the returns in both small and well established business organizations is generally the same (Jacobs, 2008).
"To measure profits, one needs to establish a time frame within which business dealings undertaken will be examined. This may on fiscal periods ranging from a single month to one year depending on the size of the business establishment (Gross, 2010). Most well established and large business organizations profits are measures on a quarterly to an annual basis. Secondly, an appropriate profit measuring procedure should be determined and employed in measuring business profits. Though the examination aspects in profit measurement are basically similar regardless of the size of an organization, the method chosen should be suitable to the business (Hirschey, 2008)."

Sample of Sources Used:

  • Drury, C. (2006). Cost and management accounting. London: Cengage Learning EMEA.
  • FAO. (n.d). Information for decision making. Retrieved March 31, 2011, from
  • Gross, M. J. (2010). Financial and Accounting Guide for Not-for-Profit Organizations. New Jersey: John Wiley and Sons.
  • Hirschey, M. (2008). Managerial economics. Kentucky: Cengage Learning.
  • Jacobs, J. F. (2008). Profit Measurement - New Principle. Retrieved March 31, 2011, from

Cite this Term Paper:

APA Format

How is Profit Measured? (2013, June 12) Retrieved January 24, 2022, from

MLA Format

"How is Profit Measured?" 12 June 2013. Web. 24 January. 2022. <>