Download Trading Profit and Loss Account Sample format below
What is Trading Profit and Loss account?
The Trading Profit and loss account also known as income statement is used to access your business performance and financial performance.
In other words, the profit and loss statement reports a company’s revenues, expenses, and most of the gains and losses which occurred during the period of time specified in its heading.
The trading profit and loss is divided into to categories:
- The trading account
- The profit and loss account
Trading account is prepared to show the gross profit or gross loss for the period. It is prepared to conform to the rules of double entry.
Here: Gross profit = Sales revenue – Cost of goods sold
Trading account looks at the difference between the sales and the cost of goods sold.
Profit and Loss account shows the net profit or net loss of a business. This account follows the trading account using value of the gross profit to ascertain the net profit or net loss for a period.
The profit and loss features All Expenses incurred during the given period (sales and marketing expenses, Administrative expenses etc.).
Here: Net Profit = Gross Profit – Total Expenses
Net loss occurs when value of total expenses incurred is greater than the gross profit. Download trading profit and loss account template here (Excel)
A Simple Example of a Trading Profit & Loss Statement:
Sample Company, Inc.
Sample Trading Profit & Loss Statement for the month/year ended
January 1-31, 2017
|Total Sales Revenue||N15,000|
|Less: Cost of goods sold||N7,000|
|Net profit = Gross profit – total expenses||N6,000|