![]() Operating income: It refers to earnings before taxes, depreciation, interest and authorization. Also included are non-cash expenses such as depreciation.ĥ. This includes rental expenses, payroll, utilities and any other expense required to operate the business. Operating Expenses: Operating expenses are administrative, general and selling expenses that are related to running the business for a specific period of time. Gross Profit: Also known as gross income or gross margin, the gross profit is net revenue excluding costs of sales.Ĥ. Cost of Goods Sold: It represents the cost of products and services.ģ. ![]() It includes the revenue earned from the primary business activity of the entity along with the non-operating revenue.Ģ. Revenue: This entry represents the net sales or receipts during the accounting period. The P&L report also allows you to investigate revenue and expense trends, cash flow, net income and overall profitability – to then allocate resources and budgets accordingly.Īnother reason to generate a profit and loss report is because it’s required by the IRS to assess taxes on the business profits. It details the ability of a business to manage its profits by cutting costs and driving revenue. ![]() The report shows information about the net profit or loss based on your revenues and expenses. The profit and loss report is an important financial statement used by business owners and accountants. Revenue - Expenses = Net Profit (or Net Loss) What Does the Profit and Loss Statement Show? Based on the standard operating procedure of a business, these statements are generated on a weekly, monthly, quarterly or annual basis. The profit and loss statements contain summarized information about revenue and expenses. How Do I Write a Profit and Loss Statement?. ![]()
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