Profit and loss (P & L) statement measures a sales & expenses of a company over a specified period of time. It shows the financial progress of a company during a period of time. So, if you have a business, it is very important to understand about profit and loss statement template. Let’s discuss it further here.
How to Write a Profit and Loss Statement Template
Below is step by step you should follow in creating a P& L statement template. To begin it, you should tell the readers the name of the company and also the period of time where the company is examined as the heading. It shows a list what happened or has transpired during a specified time.
This heading must describe. The specified time being examined, it must be complete and detailed. For example, for the month ending: month/day/year. For the quarter ending: month/day/year. For the year ending: month/day/year.
After that, you should provide some data. There are at least 4 data. The first is net sales. It is the total of sales during the specified time analyzed minus any allowance for return & trade discount. The amount allowed for return may vary between different kinds of business.
On the other hand, the amount allowed for trade discount recognizes a discrepancy between a catalog or standard price & the actual price that must be paid by the customers. It decreases the total of sales to reflect the prices that are actually paid.
The second data you should provide is the cost of goods sold. This can also be called as the cost of sales. For the wholesalers and retailers, this is the total price that must be paid for the products which are sold during the period of time. It includes the price of goods but does not include administrative expenses.
For a service & professional company, there is no cost of goods that are sold. The company receives income from royalties, commissions, fees & does not have inventories of goods. The cost to generate service is included in the administrative & selling expenses and also the general expense.
Income statement template should also include selling & administrative expenses. Selling expense the expense incurred directly & indirectly in creating sales. It includes shipping, warehousing, advertising, commissions, cost of sales office, and salaries of salespeople.
On the other hand, general & administrative expense is operating expense that is not associated directly with the goods sale. It includes supplies, non-sales personnel salary, & other operating cost needed to administration of the business.
Last, you should provide other incomes, other expenses, & other taxes. Other incomes include the incomes from royalties, rents, miscellaneous sales, dividends, interest, & gains from the capital asset sales. Other expenses include a loss from disposal of equipment.
Last, close the profit and loss statement template with a conclusion. Conclusion is the summary of most important activities of a company. Now, it is time for you to practice creating this for your own business or company.
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