Key components of a profit and loss statement

Question 1

What are the Key components of a profit and loss statement?

Answer 1

• Revenue
• Sales
• Inputs/cost of goods sold (COGS)
• Expenses
• Returns, discounts, refunds and losses
• Taxation

Question 2

Revenue

Answer 2

• Revenue - all the incomes from the day-to day operations of the business; also know as ‘top-line income’

Question 3

Sales

Answer 3

• Sales - the money recieved by the business from selling good or services

Question 4

Inputs/ Cost of goods sold

Answer 4

• Inputs/cost of goods sold (COGS) - the dircy cots involved in selling the goods of a business

Question 5

Expenses

Answer 5

• Expenses - Includes costs such as rental or equipment, COGS, freigh/shipping, payroll, advertising and marketing expenses, utilities, insurance, business rates, and property rental or mortgage.

Question 6

Taxation

Answer 6

• Taxation - income tax and national insurance (NI) deductions, VAT