Profit and Loss
Formulas
Description
Amount
Revenue - COGS
Gross Profit
Gross Profit - Operating Expenses
Operating Profit
Operating Profit + Other Income - Other Expenses
Net Profit before Tax
Net Profit After Tax
Net Profit Before Tax - Tax Expense
Steps to prepare a Profit & Loss Account
Make sure that everything is posted up to date, and that you have posted all final adjustments
Extract the revenue and expense accounts and list them in a logical format. If the credit balances add to a sum greater than the debit balances, a profit has been made. otherwise a loss has been made. Open the ledger for the next period. The opening balances for the assets, liabilities and capital accounts will be the closing balances from the previous period. All the income and expense accounts will be opened with a nil balance.
The accruals and prepayments are reverse posted into the new period.
Future Practice Owner.
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