Profit and loss account - Revision history

Designing Buildings at 08:42, 1 November 2020

2020-11-01T08:42:05Z

Designing Buildings at 17:22, 25 July 2015

2015-07-25T17:22:39Z

← Older revision		Revision as of 17:22, 25 July 2015
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	= Introduction =		= Introduction =
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	= Basic records =		= Basic records =

−	The exact profit and loss reporting requirements vary but whatever business type, accurate records are required of income and expenditure. The basic records that should be kept include:	+	The exact profit and loss reporting requirements vary, but whatever business type, accurate records are required of income and expenditure. The basic records that should be kept include:
	*Records of all sales and takings.		*Records of all sales and takings.
	*Records of all purchases and expenses.		*Records of all purchases and expenses.
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	The income into a business comes under two main categories for profit and loss reporting:		The income into a business comes under two main categories for profit and loss reporting:
−	*Sales or turnover – the total sales of products and/or services ~~in a single trading~~.	+	*Sales or turnover – the total sales of products and/or services.
−	*Other income which includes interest on any business bank accounts, sale of equipment no longer required, rental income in to the business, money put into a limited company from personal funds.	+	*Other income which includes interest on any business bank accounts, sale of equipment no longer required, rental income in to the business, money put into a limited company from personal funds and so on.

	== Business expenditure ==		== Business expenditure ==
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	The three main categories for business expenditure are:		The three main categories for business expenditure are:
	*Cost of sales – the base cost of creating the product. This includes the cost of stock for resale, components/raw materials, labour to produce the product, small tools and any other production costs.		*Cost of sales – the base cost of creating the product. This includes the cost of stock for resale, components/raw materials, labour to produce the product, small tools and any other production costs.
−	*Business expenses – the ongoing expenses associated with running a business ~~and~~ can include employee costs, premises costs, repairs, general administration, motor expenses, travel/subsistence, advertising, interest, legal/professional costs, bad debts, depreciation, any other expenses.	+	*Business expenses – the ongoing expenses associated with running a business which can include; employee costs, premises costs, repairs, general administration, motor expenses, travel/subsistence, advertising, interest, legal/professional costs, bad debts, depreciation, any other expenses.
−	*Cost of equipment purchased or leased for long-term use – known as ‘capital items’ or ‘fixed assets’ ~~and~~ can include: furniture, computer equipment, vehicles, machinery, premises.	+	*Cost of equipment purchased or leased for long-term use – known as ‘capital items’ or ‘fixed assets’ which can include: furniture, computer equipment, vehicles, machinery, premises and so on.

	The cost of fixed assets is charged for as depreciation each year which reflects the fall in the value of the asset over time which spreads the cost of the asset over several years.		The cost of fixed assets is charged for as depreciation each year which reflects the fall in the value of the asset over time which spreads the cost of the asset over several years.
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	{\| cellspacing="0" cellpadding="0" border="0"		{\| cellspacing="0" cellpadding="0" border="0"
	\|-		\|-
−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''£000s'''		'''£000s'''

−	\| \|	+	\|
	'''£000s'''		'''£000s'''

	\|-		\|-
−	\| \|	+	\|
	Turnover (or Revenue)		Turnover (or Revenue)

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	Xxx		Xxx

	\|-		\|-
−	\| \|	+	\|
	Cost of sales		Cost of sales

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	<u>Xxx</u>		<u>Xxx</u>

	\|-		\|-
−	\| \|	+	\|
	'''Gross Profit'''		'''Gross Profit'''

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''xxx'''		'''xxx'''

	\|-		\|-
−	\| \|	+	\|
	Expenses		Expenses

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	<u>Xxx</u>		<u>Xxx</u>

	\|-		\|-
−	\| \|	+	\|
	'''Operating profit'''		'''Operating profit'''

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''Xxx'''		'''Xxx'''

	\|-		\|-
−	\| \|	+	\|
	Depreciation		Depreciation

−	\| \|	+	\|
	Xxx		Xxx

−	\| \|	+	\|
−		+
	\|-		\|-
−	\| \|	+	\|
	Interest		Interest

−	\| \|	+	\|
	Xxx		Xxx

−	\| \|	+	\|
−		+
	\|-		\|-
−	\| \|	+	\|
	'''Profit before tax'''		'''Profit before tax'''

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''Xxx'''		'''Xxx'''

	\|-		\|-
−	\| \|	+	\|
	Tax		Tax

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	Xxx		Xxx

	\|-		\|-
−	\| \|	+	\|
	'''Net Profit'''		'''Net Profit'''

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''Xxx'''		'''Xxx'''

	\|-		\|-
−	\| \|	+	\|
	Dividends		Dividends

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	<u>Xxx</u>		<u>Xxx</u>

	\|-		\|-
−	\| \|	+	\|
	'''Retained Profit'''		'''Retained Profit'''

−	\| \|	+	\|
−		+	\|
−	\| \|	+
	'''Xxx'''		'''Xxx'''

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	= Find out more =		= Find out more =

−	Related articles on Designing Buildings Wiki.	+	=== Related articles on Designing Buildings Wiki ===
		+	*Final account.
		+	*Loss and expense.
		+	*PAYE.
		+	*Project bank account.
		+	*Taxation.
		+	*VAT.

	[[Category:Cost_/_business_planning]]		[[Category:Cost_/_business_planning]]

Designing Buildings: Created page with " = Introduction = Businesses will typically maintain a variety of financial statements to monitor performance over a set period. These include balance sheets, cash flow stateme..."

2015-07-25T17:16:48Z

Created page with " = Introduction = Businesses will typically maintain a variety of financial statements to monitor performance over a set period. These include balance sheets, cash flow stateme..."

New page

= Introduction =

Businesses will typically maintain a variety of financial statements to monitor performance over a set period. These include balance sheets, cash flow statements and profit and loss accounts. A profit and loss account will display the business’ income from sales, bank interest and any other income, goods to sell on to customers, or they may be more general administrative expense such as stationary. The expenses are subtracted from the sales to calculate how much profit (where income exceeds expenses) or loss (where expenses exceed income) a business is making.

A simple profit and loss account would display the income or turnover at the top with the expenses and costs beneath. The costs would usually be arranged into groups, rather than listed individually for ease. For example, rather than listing stamps, paper, pens, pencils, envelopes etc, it is appropriate to group them all under the title of stationary.

= Legal requirement =

By law, if a company is a limited company or a partnership whose members are limited companies, a profit and loss account must be submitted annually as part of the financial statement to Companies House.

Self-employed sole traders and most partnerships do not require a formal profit and loss account but accurate records are required in order to complete a self-assessment tax return.

= Basic records =

The exact profit and loss reporting requirements vary but whatever business type, accurate records are required of income and expenditure. The basic records that should be kept include:
*Records of all sales and takings.
*Records of all purchases and expenses.
*A list of petty cash expenditure (if relevant).
*A record of goods taken for personal use and any payments to the business for these.
*A record of any money taken out of the business for personal use or paid in from personal funds.
*Back-up documents of all the above.

= Information to be displayed =

== Business income ==

The income into a business comes under two main categories for profit and loss reporting:
*Sales or turnover – the total sales of products and/or services in a single trading.
*Other income which includes interest on any business bank accounts, sale of equipment no longer required, rental income in to the business, money put into a limited company from personal funds.

== Business expenditure ==

The three main categories for business expenditure are:
*Cost of sales – the base cost of creating the product. This includes the cost of stock for resale, components/raw materials, labour to produce the product, small tools and any other production costs.
*Business expenses – the ongoing expenses associated with running a business and can include employee costs, premises costs, repairs, general administration, motor expenses, travel/subsistence, advertising, interest, legal/professional costs, bad debts, depreciation, any other expenses.
*Cost of equipment purchased or leased for long-term use – known as ‘capital items’ or ‘fixed assets’ and can include: furniture, computer equipment, vehicles, machinery, premises.

The cost of fixed assets is charged for as depreciation each year which reflects the fall in the value of the asset over time which spreads the cost of the asset over several years.

= Example Profit and Loss Account =

There are varying levels of complexity of profit and loss accounts depending on the size and type of business. A very simple example is displayed below.

{| cellspacing="0" cellpadding="0" border="0"
|-
| |

| |
'''£000s'''

| |
'''£000s'''

|-
| |
Turnover (or Revenue)

| |

| |
Xxx

|-
| |
Cost of sales

| |

| |
Xxx

|-
| |
'''Gross Profit'''

| |

| |
'''xxx'''

|-
| |
Expenses

| |

| |
Xxx

|-
| |
'''Operating profit'''

| |

| |
'''Xxx'''

|-
| |
Depreciation

| |
Xxx

| |

|-
| |
Interest

| |
Xxx

| |

|-
| |
'''Profit before tax'''

| |

| |
'''Xxx'''

|-
| |
Tax

| |

| |
Xxx

|-
| |
'''Net Profit'''

| |

| |
'''Xxx'''

|-
| |
Dividends

| |

| |
Xxx

|-
| |
'''Retained Profit'''

| |

| |
'''Xxx'''

|}

= Find out more =

Related articles on Designing Buildings Wiki.

[[Category:Cost_/_business_planning]]