How to prepare a profit and loss accountАртем
for the company management, as it shows the performance of the enterprise for
the accounting period.
of the statement:
the sales volume for the accounting period (line 1). This way we get the gross profit
rate (line 4), as this is an indicator of your profit share in the overall
the operating expenses which are not directly connected with the sales volumes
(This rule is not always followed, but we will discuss it later).
mentioned for convenience, they can differ in your statement. You just have to
understand what the expense items are standing for. The expense list is to
conform with the analytics of account 92 (Operating and administrative costs)
income (Gross profit – Operating expenses total).
here is Net profit. (Operating income – Income tax). It is the result of the
enterprise performance for the accounting period. Net profit in profit and loss
account is to be equal to the line 1.4, Liabilities, Balancesheet.
sales volume for the accounting period.
standards the information in profit and loss account is shown without VAT. For this reason, we get:
- More precise net profit.
- More explicit data about profits
and losses which are actually overrated by VAT.
if you enterprise pays all the taxes duly.
prefer to “optimize” the money which is to be paid to the budget as a
value-added tax. And in this case VAT does not look like a tax, it reminds
other expense item (absolutely standardized, the amount of which is determined or
approved by the Board of Directors, or by the arrangements with tax authorities).
That’s why I consider that our local conditions stipulate the usage of VAT in the
profit and loss account, which is more convenient, and the tax itself is rendered
to the expense item titled “Taxes” (line 12).
simplest form of the profit and loss account.
differ only in the classification of costs.
into two parts:
- Marketing expenses. These costs are directly
associated with the sales, but they are not included into the production costs.
If we single out these expenses, it becomes clear how much money has been spent
on the sales.
- Operating expenses. All other running expenses.
the first one has the advantage of visual demonstration of the sales expenses.
The disadvantage is the two-unit demonstration of the expense items.
and to understand how much is spent on all these items you will have to
into three parts.
- Marketing expenses. Similar
to variant 2
- Operating expenses. Here we can find the largest
- Other Operating expenses. Here we can find the smallest