SEARCH, INDEX, UPDATES, CONTENTS, UNDERSTANDING, BASIC ACCOUNTS, P&L ACCOUNT
A published Profit and Loss Account may be a summary of main headings. A Profit and Loss Account produced for consideration by the management of a business may include a detailed analysis of expenses.
Businesses which buy goods and resell them, whether they change those goods by processing them or not, normally make a Gross Profit, which is separately identified in the accounts. Some accounts, such as those for a Doctor will not show a Gross Profit.
Some accounts will title the Profit and Loss account page differently. A Doctors accounts will normally be headed "Professional Account", that of a Charity often "Income and Expenditure Account".
The typical format of a Profit and Loss Account is -
Other Direct Expenses would typically include the wages of people making raw materials into finished goods, or packing materials.
Other Income would typically include Interest Earned on money on deposit.
Overhead Expenses are those expenses which tend not to vary directly with the level of sales. They include Rent, which will only vary with the level of sales, if sales increase to an extent that larger premises are required.
Accounts which we prepare normally show each of the expenses as a percentage of sales. This helps to identify trends in the figures from year to year.
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