Many business owners find the quarterly profit and loss statement template very helpful in preparing their financial statements. It is a set of well-explained points which outlines the income and expenses of the company for a specific quarter. It makes it easier for you to calculate the amount of profit that you have actually made.
The profit and loss statement template consist of three primary categories. These are: revenues, expenses, and assets. The first two items are basic financial categories and need no explanation. The third category on its own explains the financial position of the company.
Profits consist of gross profits as well as net profits. If there is any profit that is left over, it is considered as losses. It is also important to note that a profit is calculated as revenue minus the cost of goods sold. In other words, it means the total amount of money spent by the company in producing or selling a certain item or service.
Expenses consist of salaries, royalties, supplies, and any other types of expenses. They are charged to the company in the form of salaries, wages, and commissions. Some people may be confused when they hear expenses. For example, salaries are not considered as an expense but rather as an income for the company.
Assets also include both physical assets and financial assets. Physical assets are items like raw materials and machinery. They are sometimes used to produce raw materials, which is why they are considered as assets. Financial assets, on the other hand, consist of the money or cash that the company has on hand.
When you are creating a quarterly profit and loss statement, it is important to note that each company differs. Each company’s products and services are unique from each other. The end result of creating your own profit and loss statement template is usually something that is slightly different from what other companies use. It will differ from one to another because of the differences in the details.
The profit and loss statement are important to have because it helps in setting goals for the company. It helps to set and maintain a system for calculating income and expenses. It helps to make it easy for the company to keep track of their financial standing and help determine their actual profit or loss.
The profit and loss statement template can be completed in just about one hour. In fact, you will only need about 20 minutes to complete the entire thing. So you might want to use this method of preparing financial statements.