What is the profit and loss account?

The profit and loss account is one of the most important documents in which related data of the company's accounting are collected together with the situation balance. Specifically, the concept of profit and loss account is understood as the summary of each and every one of the expenses and income that an entity generates after a specified period of time or annually, failing that a Accounting cycle.

What is the profit and loss account for

First of all, it is important to know that each and every one of the elements that are part of the profit and loss register is divided according to its nature or its value. In this way, we know immediately what have been the benefits that the company has generated based on expenses.

With all this data, we will obtain direct information on what has made the company grow and what its strengths are. Next we are going to see the formula for the profit and loss account common in companies:

A. Operating income = Operating income - Operating expenses

  • Financial income
  • Financial expenses

B. Financial result = Financial income - Financial expenses

C. Profit before tax = Operating profit + Financial profit

  • Imposition over benefits

D. Profit for the year = Profit before tax - Tax S / Profit

  • Supplies: purchase of goods or raw materials:

Purchases of the period = Beginning stocks + purchase - ending stocks

  • Personal expenses
  • External services:
    • Leases or rentals
    • Reparations and conservation
    • Advertising, propaganda and public relations
    • Supplies
    • Insurance premiums
    • Transport
    • R&D expenses
  • Allowances for depreciation of fixed assets.

Operating income:

  • Sale of goods
  • Sale of finished products
  • Provision of services
  • Rental income
  • Income from various services

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