The Profit and Loss Statement Form reports the Business Net Profit and is a key Financial Statement. Below is an example of what a typical Profit and Loss Form Statement Calculation looks like.
Total revenue $750000
Cost of Goods Sold $25000
Gross Profit = $725000
Interest & bank charges $11000
Printing and stationery $455
Professional dues $800
Repairs & maintenance $3000
Auto costs $5000
Wages & salary $145000
Workers comp $2500
Misc expenses $575
Less Total Expenses $190930
Equals Net Profit $534070
The QuickBooks program will automatically generate the Income Statement lines above and fill in the corresponding amounts. You don’t have to be a Bookkeeper or an Accountant to prepare a Profit and Loss Statement using QuickBooks.
I would recommend trying QuickBooks online free trial offer for 30 days, as it’s a lifesaver when keeping track of business transactions.
Profit and Loss Form Line Descriptions:
Income – The total revenue received by the company.
Cost of Goods sold – Also known as COGS are the total costs of products held in inventory.
Gross Profit Margin – The difference among revenue and COGS.
Operating Expenses – The total overhead O/H and labor ex related to the business activities.
Total expenses – Total of COGS and the operating expenses for the company.
Net Profit – Gross profit margin minus company’s total expenses.
Depreciation – Shows the decrease of value in company assets that are used in the business to earn money. Depreciation is also used for various tax deductions for the company.
Earning before interest & taxes – Shows the company’s ability to repay its various obligations.
Interest – The interest payable for debt including short and long term debts.
Taxes – Taxes for the company, including Federal, State, local and all other associated tax expenses. This will also include your 940 payroll taxes if you have employees.
Net profit after taxes – The bottom line for the company.
There are some great instructional books out there that we recommend if you would like to learn some more about the P&L or any other Financial Statement such as the Accounting For Dummies book. It’s a great book if you are new to accounting and the key Financial Statements.
Understanding & Including the Profit & Loss Form
The Profit and Loss Statement also known as the Income Statement is key Financial Statement for any business and should be a normal part of your company’s bookkeeping system. Most programs out there like QuicksBooks have a built in Profit and Loss Statement Form Calculator which makes putting together this statement easy.
A great trick is downloading QuickBooks free trial offer as this program will generate all of the necessary Financial Statements for you.