Income (Profit and Loss) Statements

A profit and Loss (or Income) Statement details the trading performance of a business over a period of time, and their production is a legal obligation for all publicly listed companies.

The previous year is often given beside the current year to enable comparison as can be seen in the fictitious example below.
 
TABLE 1: INCOME STATEMENT
Business Planning - Income Statements

ABOUT THE INCOME (PROFIT & LOSS) STATEMENT:

  1. The turnover is the total sales revenue for the period (or the money you received from selling your goods).
  2. The cost of sales (or direct or variable costs) includes raw materials, labor costs (that can be directly attributed to output) and any other direct product production costs.
  3. Expenses (or indirect (fixed) costs or overheads) are costs that are not directly attributable to output such as money spent on business stationery.
  4. Depreciation is a value to account for the fall in value of a fixed asset as it is used up, such as a computer.
  5. Dividend is the share of profit that is paid to the shareholders.
  6. Retained profit is profit that is not paid to shareholders but is retained by the company to fund its growth and expansion.

 
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Summary
Business Planning: Income (Profit and Loss) Statements
Article Name
Business Planning: Income (Profit and Loss) Statements
Description
Business Planning: A fast basic overview of income (profit and loss) statements and their jargon - by a non-Accountant.
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Publisher Name
Undercover Strategist
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