Introducing Profit and loss statements

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A presentation for year 12 accounting students, introducing them to the components of basic Profit and Loss Statements

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Introducing Profit and loss statements

  1. 1. Reporting Period Time<br />
  2. 2. Two Major Reports<br />Profit and Loss<br />Balance Sheet<br />
  3. 3. Revenue less expenses = profit<br />
  4. 4. Profit and Loss Statement<br />Gross profit (Revenue less cost of goods sold)<br />Net profit (Gross profit less expenses)<br />
  5. 5. Cost of Goods Sold<br />Includes any expenses incurred in purchasing the stock and getting it ready for sale. eg<br />Cartage inwards<br />Buying expenses<br />Customs duty on imports<br />Packaging costs<br />
  6. 6. Calculating gross profit<br />Revenue<br />Cash sales X<br />Credit sales XX<br />Less cost of goods sold<br />Cost of sales X<br />Buying expenses X<br />Import duty XX<br /> Gross profit X<br />
  7. 7. Accounting for stock loss<br />Revenue<br />Cash sales X<br />Credit sales XX<br />Less cost of goods sold<br />Cost of sales X<br />Buying expenses X<br />Import duty XX<br />Gross profit X<br />Less stock loss X<br />Adjusted gross profit X<br />
  8. 8. All the way to net profit!<br />Revenue<br />Cash sales X<br />Credit sales XX<br />Less cost of goods sold<br />Cost of sales X<br />Buying expenses X<br />Import duty XX<br />Gross profit X<br />Less stock loss X<br />Adjusted gross profit X<br />Less expenses<br />Cartage outward X<br />Advertising X<br />Office expenses X<br />Interest XX<br />Net Profit X<br />
  9. 9. What about discounts?<br />Revenue<br />Cash sales X<br />Credit sales XX<br />Less cost of goods sold<br />Cost of sales X<br />Gross profit X<br />Plus Other revenue X<br />Discount revenueXX<br />Less Other expenses<br />Advertising X<br />Office expenses X<br />Discount expenseXX<br />Net Profit X<br />

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