Profit and loss statements are important documents which are very important for a business, whether it be a huge company or a small convenience store.
A profit and loss statement, also known as an income statement, is a good indicator of the financial state of the business.
That is why a statement template should take all of the needed information into account.
Income statements should indicate the revenues and the expenses of a business.
Revenues are considered as the total income of the business.
This is also referred to as "top line" because it appears first in an income statement.
This means that all inflows of cash during the business' operations should be taken into account whether it be for the goods sold or the services rendered.
Expenses, in contrast, are the money spent for the operation of the business.
This should include the entire amount of money spent during business operations as well as the decline of value of any assets.
The cost of the production of goods such as the money used in buying raw materials and the cost of labor is listed down as expenses.
Other expenses also include advertising, bookkeeping, bank and credit card fees, insurance, legal and professional services, rent, and telephone bills among others.
A profit and loss template should also put into account the taxes paid by the business.
After all the revenues and expenses have been tallied, the expenses are subtracted from the revenues and the result amount is the net income of the business.
Remember that a statement states the net income over a given period time.