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The Profit and Loss report (P/L) is a statement that shows the operating income and costs of your business. As a business owner, you probably want to see this report every month. While a balance sheet provides a snapshot on a particular date, the Profit and Loss report shows transactions over a certain period of time. The P/L shows earnings, expenses, and net profit. When reviewing the statement, key elements to look for are the accuracy of the data, that all income and expenses are accounted for, and that the layout of the report is helpful and easy to understand.
A particular layout I like to review is a year-to-date report by month. This gives me a quick assessment of income and expenses and how they compare to other months in the given year. An example:
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Jan. |
Feb. |
March |
Total |
|
Income |
100,000 |
80,000 |
90,000 |
270,000 |
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Expenses: |
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|
|
|
|
Office Supplies |
100 |
50 |
80 |
230 |
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Payroll-Wages |
20,000 |
21,000 |
19,000 |
60,000 |
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Total Expenses |
20,100 |
21,050 |
19,080 |
60,230 |
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Net Income |
79,900 |
58,950 |
70,920 |
209,770 |
This type of format makes for easy comparison of income and expenses by month, thus allowing for critical decisions to be made regarding future expenditures based on past performance.
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