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The Trading and profit and loss (P&L) report summarises the revenues, costs, and expenses incurred during a specific period of time. A P&L report provides information about whether a company can generate profit by increasing revenue, reducing costs, or both.
How to open Trading and Profit and Loss Report:
- Go to the Report module in the left sidebar.
- Click on the Trading and Profit and Loss Report option in the Financial Report section.
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- Here you can click the Default View option to select from many options like expand every Undergroup to show all Accounts under it.
- Now, the user is able to Download or Email the Trading and profit and loss report in Excel and PDF format by clicking on the Export option.
- Also, users can select a custom date range for the Profit and Loss report by clicking on the Current Financial Year option.
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It summarises the income, expenses, and profit/loss of a business during a financial year. It is divided into two main parts:
- Trading Account (Upper Part)
- Profit & Loss Account (Lower Part)
Let’s take a closer look at this report to understand it better.
1. Trading Account (Upper Half)
This part helps to determine the Gross Profit or Loss of the business.
Left Side (Debits – Costs – Expenses)
- Opening Stock: Inventory available at the beginning.
- Purchase Accounts: Cost of goods purchased for resale.
- Direct Expenses: Expenses directly tied to production or purchase like freight, wages, salaries.
Right Side (Credits – Revenue – Incomes)
- Sales Accounts: Revenue from sales (like Export Sales and Sales Taxable).
- Closing Stock: Inventory still available at the end of the period.
- Direct Incomes: Income directly from the core business.
Gross Profit = Credits – Debits
2. Profit & Loss Account (Lower Half)
This section calculates Net Profit or Loss, considering indirect incomes and expenses.
Left Side (Indirect Expenses)
- These are not directly linked to production but necessary for running the business (e.g., salaries, admin expenses, discount allowed, round off).
Right Side (Indirect Incomes)
- Earnings from non-core activities. (e.g., discount received).
