How to Format a Profit and Loss Statement

The categories of a profit and loss statement are arranged in a specific order regardless of the legal form of the business (i.e., sole proprietor, C corporation, etc.). Within each category, revenues and expenses may be listed separately or grouped. Financial reporting needs to remain consistent over a period of time. Listing the same type of expense under different headings year after year may raise a red flag.

Difficulty: Moderately Easy

Instructions

Format Main Sections

1. The statement of profit and loss follows a general format that begins with an entry for revenue and subtracts from revenue the costs of running the business, including cost of goods sold, operating expenses, tax expense and interest expense. The bottom line (literally and figuratively) is net income (profit).

2. Confirmation: This is a listing of all future and option transactions made as of the date indicated. Securities on deposit and market value are also shown.

3. Purchase & Sale: A listing of offsetting transactions and the resulting profit/loss information.

4. Journal Entries: A listing of all cash transactions affecting the account’s ledger balance.

5. Open Positions: A listing of all open positions with trade prices, current settlement prices and unrealized profits or losses.

6. Account Summary: All relevant financial totals are summarized by individual currency and converted to U.S. Dollar value.

7. A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement".

Tips & Warnings

• The balance sheet, income statement and statement of cash flows are the most important financial statements produced by a company. While each is important in its own right, they are meant to be analyzed together.
• Simply stated, profits are equal to the difference between revenues and expenses:
• For additional information contact an accountant..