The profit and loss report is also known as an “income statement”. It shows how much money your business made (income) and how much money your business spent (expenses) over a specified period of time. The profit & loss report shows how profitable your business is.
Sales is income the business received from selling its products and services. Examples include the sales of products and services, consulting fees, and investment income.
The cost of goods sold refers to the costs associated with making products from raw materials or buying products for resale. The COGS is considered an expense to the business.
Gross profit refers to the company’s profit after subtracting the costs of making or selling your products (COGS).
Expenses are the costs or what you paid in order to operate your business. This includes wages, marketing, travel, advertising, professional fees, rent, insurance, internet, phones, etc.
Profit is the difference between gross profit and expenses.This number indicates whether your business has earned or lost money.
The profit and loss report (like any financial report) is only as good as the data that feeds it. This is why it’s important that as your bookkeepers, we capture all your sales, COGS, and expenses. The more complete data we have means the more accurate your reports will be.
Insightful Financial Connections provides two monthly financial reports (profit & loss and balance sheet) to all our bookkeeping clients. Customized reports are also available which can provide further insight into your business.
If you have any questions about your report, please contact us and we would be happy to review it with you.