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Understanding the profit and loss report

The profit and loss report summarises the income, direct costs and expenses incurred during a period of time - usually a financial year within your business.  

If you are using the standard profit and loss structure (how to customise the chart of accounts) the report will already be set up using the recommended headings and layout.

The profit and loss report is one of two reports (the other being the balance sheet) that provides you with very relevant and usable information on the state of your business at any point of time using real time information.  You should get into a habit of generating this report at regular intervals to provide an ongoing sense of awareness of the figures.

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After clicking on the option from the menu the default report shows the current month and year to date figure (from the beginning of the accounting period as defined in Clever Accounts).

The report is separated in order to shows the figures easily.

Sales:  shows any income (bank receipts or sales invoices) that have been assigned to the sales codes.

Cost of sales:  any products that are purchased to resell, or the cost of manufacture will be shown here.

Direct expenses:  if you pay for sub contractor labour and have assigned it the relevant account code.

Expenses: will shows the vast majority of the expenses of the business such as rent, wages, admin costs etc.

Each category (above) is further sub-divided into a group such as Total Sales or Gross Wages or Travelling.  Each of these groups combine all like items together to allow you to see what the overall figure is.

Each group is finally sub-divided into account codes.  Account codes are the individual income or cost centres that you assign your receipts.

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Each of the groups can be clicked on to drill down to the individual account code totals and further to the actual transactions that make up the report.


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