A Financial Statement that outlines a company’s revenue, Costs and Expenses over a specific period of time.
What is a Profit and Loss Statement?
Profit & Loss Account is a type of Financial Statement which reflects the outcome of business activities during an accounting period (i.e. profit or loss). Reporting income and expenses are directly related to an organization’s are considered to measure the performance in terms of profit & loss.
Example: A P&L Statement shows a company’s revenue minus expenses for running the business, such as rent, cost of goods, freight, and payroll. Each entry on a P&L statement provides insight into the cash flow of the company and shows where money is coming from and how it is used.
The Objective of Profit & Loss A/c
The very purpose of a Profit and Loss Account is to ascertain whether the business is making profit or loss for a given period. In other words, Profit & Loss account reveals money spent or cost incurred in an organization’s effort to generate revenue, representing the cost of doing business.
Table of Contents:
Concepts
Profit and Loss Basic Concepts
Let us learn profit and loss concepts in maths. It is well explained in terms of cost price and selling price.
1. Profit
The amount gained by selling a product for more than its Cost Price.
2. Loss
The amount the seller incurs after selling the product less than its Cost Price.is mentioned as a loss.
3. Cost Price (CP)
Fixed Cost – The Fixed Cost is constant, it doesn’t vary under any circumstances
Variable Cost – it could vary depending on the number of units and other factors.
4. Selling price (SP)
The amount for which the product is sold is called the SP. It is usually denoted as Selling Price. Also, sometimes called a Sale Price.
5. Marked Price Formula (MP)
This is basically labelled by shopkeepers to offer a discount to the customers in such a way that,
Discount= Marked Price – Selling Price
Discount Percentage= (Discount/Marked Price)*100
Profit Calculation Formula
Profit = Gross Revenue – Total Expenses
=$850-$330
=$520
Profit and Loss Formulas
Now let us find the Profit formula and Loss formula.
The Profit or Gain is equal to the Selling Price minus the Cost Price.
Loss is equal to the Cost Price minus the Selling Price.
- Profit or Gain = Selling Price – Cost Price
- Loss = Cost Price -Selling Price
Impact of Accounting Principles on the P&L Statement
• Revenue Recognition Principle – Revenue is usually identified before cash is received.
• Matching Principle – Expenditures are compared to revenues during the period those revenues are earned.
There are six types of Profit and Loss Report Formats are available
Check out the below given "How to Generate Profit & Loss Summary Report in the Fresa Application"
Step 1. Login with Fresa Application, Go to the Accounts Module and click on Profit & Loss Reports.
Step 2. Then, click the Profit & Loss Summary Report.
Step 3. Select the Branch Name, Current From Date, To Date and Currency, finally click the Submit button.
Step 4. Now, we can see the Profit & Loss Summary, then download the report using the Options button and click the Report button.
Step 5. In the given List of Reports, click the Required Report Format to be downloaded.
Step 6. Then we can get the Report as per our required Format. If we want to Print the Report, click the Print button.
Hope now we got an idea How to Generate Profit & Loss Summary Report in the Fresa Application.
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