Final accounts – an understanding – Key statements

 

We introduced you to the three key statements of accounts in the  Learning & Development group, in the last post.

https://faoblog.com/final-accounts-understanding-key-statements-2/

The three key statements we listed were :

• The Profit & Loss Account / Income & Expenditure statement
• The Balance Sheet
• The Cash Flow statement

We briefly talked about the Profit & Loss / Income & Expenditure Statement, which represented the status of operations, the financial success or failure of what the business did over a defined period of time.

A standard vertical format for this statement will comprise of:

Net Revenue/Sales

Less: Cost of Sales

Gross Profit

Less:Operating Expenses

Selling and Marketing (S&M) expenses

General and Administrative(G&A) expenses

Research and Development (R&D) expenses

Less: Depreciation

Income(Loss) from Operations (EBIT)

Add:Other Income (e.g. Interest Income, Gain on sale of fixed asset)

Less:Other Expense (e.g. Interest Expense, Loss on sale of fixed assets)

Income before Unusual Items and Income Tax

Add/Less: Unusual or infrequent items

Income before tax

Less: Provision for Taxes (Current and Deferred)

Income after tax

 More on these to follow ….

Mohit Gupta