Profit and Loss

06/15/2012 - Buying is a daily routine in our life and as you buy, have you ever wondered how some companies suddenly shut downs or suddenly prospers, while some are still at the average level; alive and kicking for more costumers. Hmmmmmm...

Well, Profit and Loss may help in this kind of situation. In companies, it's also called "income statement" where it helps them to track their income and expenses on a quarterly or annual basis. Knowing this, one must then know this formula which is:
     
      gross sales *
    - refunds *
    -----------------------
      net sales                                   * it is important that these are given
    - cost of goods sold **              ** same as * but may use the other formula to compute  the answer
    ----------------------- 
      gross profit
    - operating expenses *
    -----------------------
      net profit   

Every company or store also needs to keep track of their items in hand which they call inventoring here is also a formula to remember:

      beginning inventory
    + purchases
    -----------------------
      goods for sale
    - ending inventory
    -----------------------
      cost of goods sold

Some companies share their income statements online. Try practicing as early as now and maybe one day it may pop up in your lives and hunt you but since you already know this stuff then you'll just scare it away.

----------------------------------------------------------------------------------------------------------------------------------
sample problem: Monica's store has the sales of P499,819 for the 4th quarter. Her expenses is as follows: salary P3,000, rent P23,000, utilities P2,300 and miscellaneous P10,549. If their is a refund of P12,987 for defective supplies and the cost of goods amounting to P300,576.

SOLUTION
                                                                                                               
      gross sales                  P499,819.00
    - refunds                           12,987.00
    ---------------------------------------------
      net sales                      P486,832.00            
    - cost of goods sold        300,576.00
    --------------------------------------------- 
      gross profit                 P186,306.00
    - operating expenses 
                 salary        3,000
                 rent         23,000
                 utilities     2,300
                 misc.      10,549
                                              38,849.00
    ---------------------------------------------
      net profit                     P147,457.00
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
checked by Prof Paner Cris