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Accounting - The Profit and Loss statement example
The Profit and Loss statement example
Profit and Loss statement for the month ending 31 May
REVENUE
£
£
£
Cash sales
4 000
Credit sales
5 900
9 900
- COST OF GOODS SOLD
6 600
GROSS PROFIT
3 300
+ Rent
800
4 100
- OPERATING EXPENSES
SELLING EXPENSES
Advertising
1 700
Depreciation of motor vehicles
100
Salaries
1 400
3 200
ADMINISTRATIVE EXPENSES
Accounting fees
450
Supplies
150
Depreciation of office equipment
200
800
FINANCE EXPENSES
Discount expense
100
Legal costs
300
400
4 400
NET PROFIT AND LOSS
(300)
In the example above the business makes a loss and the loss has to be
transferred to the balance sheet. Explain why the business makes a loss yet
the balance for bank has increased.
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The Company bank balance is increased because, the company has a balance brought forward (2) Depreciations are not direct expense paid to external vendor. Therefore the balance in bank still increases
the expenses is higher than G.P
because the expense high in the profit and loss statement only occur by income and expense so the expense is higher than the expense
The company has purchased items which are still to be paid for - items on account.
How can I be more profitable in the vehicles are 100 dollars is a big loss I would like to prevent this loss .
The company does have an increase in the bank balance yet a 300 loss because of depreciation and discounts given. These are not tangible items you can see like money but do affect the bottom line.
Revenue is Less than expenses so income statement is show to Loss.
i think the profit and loss statement details if a firm is making a profit or running a loss. From the above above example, we realize the firm's total expenses outweighed the total revenue it received and therefore a net loss of $300. The net loss(N.L) is therefore given as the total revenue(T.R) minus total expenses (T.E)........ N.E = TR - TE
The firm had more expenses than total income. The bank balance income increased because the firm has an outstanding balance and have not been paid only recorded.
The loss occur because the operation expenses more than the gross profit and the rent . But, why we add the value of the rent ? The rent must be deducted from the gross profit .