The Profit and Loss statement example
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The Profit and Loss statement example

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    FAISAL A.
    YE
    FAISAL A.

    The bank balance shows an increase beacause its in diffrenet Period of time

    Gabriel O.
    ML
    Gabriel O.

    A common explanation for a company with a net loss to report a positive cash flow is depreciation expense. Depreciation expense reduces a company's net income (or increases its net loss) but it does not involve a payment of cash in the current period. For example, if a company purchased equipment last year for $2,100,000 and depreciates the equipment over seven years, its depreciation expense this year might be $300,000. This year's $300,000 entry involves a debit to Depreciation Expense and a credit to Accumulated Depreciation. Not a penny left the checking account this year. (All $2,100,000 of cash left the checking account last year.) If the company's income statement reports a loss of $50,000 after the $300,000 "non-cash" depreciation expense, its cash may have actually increased by $250,000

    Wendy C.
    AU
    Wendy C.

    Items incorporated in Profit and Loss Statement Profit and Loss Statement period Revenue Cash sales Credit sales Cost of goods sold Gross profit Rent Operating expenses Selling expenses Advertising Depreciation of motor vehicles Salaries Administrative expenses Accounting fees Supplies Depreciation of office equipment Finance expenses Discount expense Legal costs Net Profit and Loss

    Shakir titilope A.
    GB
    Shakir titilope A.

    The table shows that the business was at loss end. But come to think of it, is it right for rent to be added to gross profit or not?

    Shakir titilope A.
    GB
    Shakir titilope A.

    Why is rent added to gross profit please?

    Samuel F.
    ZA
    Samuel F.

    A common explanation for a company with a net loss to report a positive cash flow is depreciation expense. Depreciation expense reduces a company's net income (or increases its net loss) but it does not involve a payment of cash in the current period. For example, if a company purchased equipment last year for $2,100,000 and depreciates the equipment over seven years, its depreciation expense this year might be $300,000. This year's $300,000 entry involves a debit to Depreciation Expense and a credit to Accumulated Depreciation. Not a penny left the checking account this year. (All $2,100,000 of cash left the checking account last year.) If the company's income statement reports a loss of $50,000 after the $300,000 "non-cash" depreciation expense, its cash may have actually increased by $250,000

    Lawrence T.
    GH
    Lawrence T.

    Cause it represents a period of time like the cash flow statement. This contrasts with the balance sheet, which represents a single moment in time.

    Olusuyi O.
    NG
    Olusuyi O.

    There are expenses which does not involve cash movement at the moment but has to be provided for. For instance depreciation is just a provision for that part of the asset used in the course of generating the income.

    Harrison A.
    AT
    Harrison A.

    The business makes a loss yet the bank balance increased cause the deposit already with the bank appreciates.

    Harrison A.
    AT
    Harrison A.

    what are the factors that could make a business loss ?

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