Profit and loss account new format
The Profit and Loss Account (P&L) is a financial statement that summarizes the revenues, costs, and expenses of a business over a specific period of time. The new format of the P&L account is as follows:
Profit and Loss Account (New Format)
Revenue
- Sales Revenue
- Other Income (e.g. interest, dividends, etc.)
- Total Revenue
Cost of Goods Sold (COGS)
- Direct Materials Cost
- Direct Labor Cost
- Overheads (e.g. manufacturing overheads, etc.)
- Total COGS
Gross Profit
- Gross Profit = Total Revenue - Total COGS
Operating Expenses
- Selling and Marketing Expenses
- Administrative Expenses
- Research and Development Expenses
- Other Operating Expenses (e.g. insurance, etc.)
- Total Operating Expenses
Operating Profit
- Operating Profit = Gross Profit - Total Operating Expenses
Non-Operating Income/Expenses
- Interest Income
- Interest Expense
- Foreign Exchange Gain/Loss
- Other Non-Operating Income/Expenses (e.g. gain/loss on sale of assets, etc.)
- Total Non-Operating Income/Expenses
Profit Before Tax
- Profit Before Tax = Operating Profit + Non-Operating Income/Expenses
Tax Expense
- Tax Expense = Profit Before Tax x Tax Rate
Net Profit
- Net Profit = Profit Before Tax - Tax Expense
Notes:
- The new format of the P&L account is more detailed and provides a clearer picture of the company's financial performance.
- The COGS section is more detailed, with separate lines for direct materials, direct labor, and overheads.
- The operating expenses section is also more detailed, with separate lines for selling and marketing, administrative, and research and development expenses.
- The non-operating income/expenses section includes items such as interest income, interest expense, and foreign exchange gain/loss.
- The tax expense is calculated as a percentage of the profit before tax, and is deducted from the profit before tax to arrive at the net profit.
It's worth noting that the exact format of the P&L account may vary depending on the industry, company size, and jurisdiction.