Introducing Profit and loss statements
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A presentation for year 12 accounting students, introducing them to the components of basic Profit and Loss Statements
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Introducing Profit and loss statements
- 2. Two Major Reports Profit and Loss Balance Sheet
- 3. Revenue less expenses = profit
- 4. Profit and Loss Statement Gross profit (Revenue less cost of goods sold) Net profit (Gross profit less expenses)
- 5. Cost of Goods Sold Includes any expenses incurred in purchasing the stock and getting it ready for sale. eg Cartage inwards Buying expenses Customs duty on imports Packaging costs
- 6. Calculating gross profit Revenue Cash sales X Credit sales XX Less cost of goods sold Cost of sales X Buying expenses X Import duty XX Gross profit X
- 7. Accounting for stock loss Revenue Cash sales X Credit sales XX Less cost of goods sold Cost of sales X Buying expenses X Import duty XX Gross profit X Less stock loss X Adjusted gross profit X
- 8. All the way to net profit! Revenue Cash sales X Credit sales XX Less cost of goods sold Cost of sales X Buying expenses X Import duty XX Gross profit X Less stock loss X Adjusted gross profit X Less expenses Cartage outward X Advertising X Office expenses X Interest XX Net Profit X
- 9. What about discounts? Revenue Cash sales X Credit sales XX Less cost of goods sold Cost of sales X Gross profit X Plus Other revenue X Discount revenueXX Less Other expenses Advertising X Office expenses X Discount expenseXX Net Profit X