Profit and Loss refers to money made (revenue) and money paid (costs). A company monitoring profit allows to monitor revenue and costs.
There are two parts to this, recording of financial data for example bookkeeping and measuring the result, what are your profits/expenses in comparison.
Profits can be ‘spent’ in 3 ways, investment, returned to owners e.g. a ‘dividend’ or pay owed tax.
Profit and Loss Report
The Profit and Loss Report consists of two parts.
1. The Trading Account.
The trading account records the money in (revenue) and out (costs) of the business from buying/selling. This might be buying raw materials and selling finished goods; it might be buying goods wholesale and selling them retail. The figure at the end of this section is the Gross Profit.
2. The Profit and Loss Account
This starts with the Gross Profit and adds to it any further costs and revenues, including overheads. These further costs and revenues are from any other activities not directly related to trading. An example is income received from investments.
Uses of the Profit and Loss Report:
The main use is to monitor and measure profit, as discussed above. This assumes that the information recorded is accurate. Significant problems can arise if the information is inaccurate, either through human error or deliberate fraud. Once the profit/loss has been accurately calculated, this can then be used for comparison i.e. judging how well the business is doing compared to itself in the past, compared to the managers’ plans and compared to other businesses.
How to access the profits & loss report:
Step 1. Click on the Accounts Module.
Step 2. Open the "Profit & Loss Report" by clicking the 'Profit and Loss' function button on the top row.
Step 3. Use radio buttons to choose the information you want to view.
**Ex = Shows amount excluding tax. Inc = Shows amount including tax. Both = Shows columns for Inc and Ex
How to select by department:
Step 1. Click on the Accounts Module.
Step 2. Open the "Profit & Loss Report" by clicking the 'Profit and Loss' function button on the top row.
Step 3. Click on the "Select" button in top left hand corner in front of "Department" - this opens department selection window
Step 4. Check box for selected department (can check several boxes for more than 1 department)
Step 5. Check "Select All" ONLY IF you wish to use all departments on the report
Step 6. Click OK button to return to report
