Q:

What information do you include on a profit and loss worksheet?

A:

Quick Answer

A profit and loss worksheet includes all sources of income from a business and all expenses necessary to earn that income, explains Accounting Basics. The report can cover any time period for which you want to measure the profitability of the business.

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Full Answer

For a profit and loss worksheet, list all revenue, meaning income earned from sales and fees for the work the business does, instructs Accounting Basics. For instance, a tire shop would list income from passenger tires, truck tires and flat repairs. Next, list all expenses for cost of goods, meaning the cost of the items sold. The tire shop would list the cost of tires, patches and anything else it sold. By subtracting the cost of goods from the revenues, you calculate the gross profit of the business.

Next, list all operating expenses, meaning the expenses for running the business, says Accounting Basics. Operating expenses include rent, payroll, taxes, electricity, advertising, insurance and anything else you spend money on. Subtract the operating expenses from the gross profit to get the net operating income.

Finally, list any additional income, such as interest earned or the sales of used equipment, as Investopedia demonstrates. Add this total, if any, to the net operating income to get the net profit for the business. If the net profit is positive, the business has a profit. If the net profit is negative, the business has a loss.

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