The Profit and Loss Account (P&L) is generally prepared annually and forms part of the financial statements of a business firm / company and sole trader / proprietors. This statements gives an insight into the operation of a business firm and efficiency of management in carrying out the business and additional this statement is required to complete and file your income tax return.
Profit and loss statement depicts income and expenses and how much profit has been made by the business over the one full financial year period it has been prepared for.
Anyone can prepare the Profit and loss statement although most businesses choose an accountant and is part of the general bookkeeping. Profit and loss account is integral part of financial statements and includes a Balance Sheet, cash flow statement and bank reconciliations.
Firms operating transactions are grouped to Revenue, Cost of sales ( Goods / Services) , Gross Profit, Operating expenses, net profit, operation profit and profit before tax.
You can prepare a simple P&L yourself by developing an excel spreadsheet or use any accounting software.
To know more on preparation of financial statements, Profit and loss statement, Balance Sheet, Cash Flow and Bank / Credit Card / PayPal Account Reconciliations contact us at info (at) actuitindia.com.