Profit and Loss Statement Paper

Profit and Loss Statement Paper

Dustin Klusman

BSA/310

March 16, 2013

Sharon Foreman

Profit and Loss Statement Paper

Companies use an income statement to report costs, expenses, revenue, and other incomes over a specified accounting period. This time period is usually quarterly, semi-annually, or annually. Analyzing the information contained within the Kudler Find Foods income statement for the year ending December 31, 2003 will show these different areas within the company. Each section will be analyzed to explain the information presented. The sections of the income statement are as follows

• Revenue

Net Sales

• Cost of Goods Sold

Gross Profit (Loss)

• Expenses

Total Expenses

Net Operating Income

• Other Income

• Net Income (Loss)

Revenue

Revenue is the amount of Gross Sales minus Sales Returns and Allowances. This would be Gross Sales $10,804,000 – Sales Returns and Allowances $7,800 equaling $10,796,200 ($10,804,000 - $7800 = $10,796,200) (Apollo Group, Inc., 2013). Gross Sales are the amount earned from items sold in 2003. Sales returns occurs when customers return items for a refund. These items may be damaged or defective. Sales allowances refer to when customers keep this merchandise for a reduced price (Walther, 2011). By subtracting the sales returns and allowances the Net Sales amount is reached. This amount shows the final amount of sales for the time period.

Cost of Goods Sold

This section shows the cost of goods and the expenses attached to the goods. The beginning inventory or inventory that is already available at the start of the accounting period is listed first. Added to this amount are purchases, freight in (shipping), direct labor, and indirect expenses. From this total the ending inventory is subtracted giving a total of the cost of goods sold. This amount is subtracted from the Net...