Q:

How do you make a simple profit and loss statement?

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Quick Answer

To make a simple profit and loss statement, fill the heading of your worksheet with your company name and the reporting period, then fill in the net sales and subtract the cost of goods sold to calculate the gross margin, advises Edward Lowe Foundation. Subtract expenses to calculate net income.

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How do you make a simple profit and loss statement?
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Full Answer

A profit and loss statement details the sales and expenses of a company within a given financial period, according to Edward Lowe Foundation. It compiles a company's sources and amounts of revenue and subtracts all expenses incurred to find the net profit or loss realized within the period in question. The statement contains a heading with the name of the company, a document title and the reporting period.

After writing the heading, draw three columns for the transaction particulars, as well as the debit and credit amounts. Fill the first row with the net sales. Take the value of the beginning inventory, add purchases and freight costs, and subtract the ending inventory to find the cost of goods sold. Subtract this cost from the net sales to find the gross margin. Subtract the selling and administrative expenses from the gross margin to find the net profit or loss before taxes, states Edward Lowe Foundation.

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