2015-08-21
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THE CASH-FLOW STATEMENT
A Profit and Loss account is a summary of a firm's revenues and expenses during a specified accounting period. The Profit and Loss account is sometimes called the income statement, the earnings statement or the statement of income and expenses. It may be prepared monthly, quarterly, semiannually, or annually. A Profit and Loss account covering the previous year must be included in a corporation's annual report to its stockholders.
Figure 3.2 shows the profit and loss account for Northeast Art Supply. Note that it consists of four sections. Generally, revenues less cost of goods sold less operating expenses equals net income from operations.
| NORTHEAST ART SUPPLY, INС Profit and loss account For the year ended December 31, 20.. | |||
| Revenues Gross sales Less sales returns and allowances Less sales discounts Net sales Cost of goods sold Beginning inventory, January1, 20.. Purchases Less purchase discounts Net purchases Cost of goods available for sale Less ending inventory December 31, 20.. Cost of goods sold Gross profit on sales Operating expenses Selling expenses Sales salaries Advertising Sales promotion Depreciation – store equipment Miscellaneous selling expenses Total selling expenses General expenses Office salaries Rent Depreciation – delivery equipment Depreciation – office furniture Utilities expenses Insurance expenses Miscellaneous expenses Total general expenses Total operating expenses Net income from operations Less interest expenses Net income before taxes Less federal income tax Net income after taxes | $ 9,500 4,500 $346,000 11,000 $ 30,000 6,000 2,500 3,000 1,500 $ 18,000 8,500 4,000 1,500 2,500 1,000 500 | $465,000 14,000 $40,000 335,000 $375,000 41,000 $ 43,000 36,000 | $451,000 334,000 117,000 79,000 $37,500 2,000 $ 35,500 5,325 $ 30,175 |
Figure 3.2
