To know about the profit of the business, we have to look at the profit and loss account of that company, then it tells us that my company has earned profit or loss in that financial year. So for this, we have to create a profit and loss account of the company, in which we get to know how much we have sold in our company and how much has been spent to run the company. So when we need to know this, we know about it from the Profit and Loss Statement.

NET PROFIT = INCOME – EXPENSE

SOME BASIC TOPIC OF PROFIT AND LOSS FINANCIAL STATEMENT

• REVENUE FORM OPERATION:-Whatever profit is due to my business due to its work means our Sales and our business gets profit due to anything, then we Called it revenue from operation.

HOW TO CALCULATE THE REVENUE FROM OPERATION

• OTHER INCOME:- This is my income that is not related to running the business, in which we have to profit from any other. Like Interest Received On Fixed Deposit, E-Coupon.

• TOTAL REVENUE:- When we come to know our total sales, then we add our other income to it, then it is called my total revenue. (Revenue From Operation + Other Income = Total Revenue From Operation )

2. Expenses

All the money that is put into running a business. So that business does not suffer loss and if the business runs properly, then the money invested in running a business is called an expense for us.

(a)Direct Expense:- Expense like that, in any business, I know that there will be an increase in my expenses from which no company can survive, it will cost that much, then we called it a direct expenditure. like salary, raw materials, manufacturing supplies, customer service, etc.

(b)Finance cost:- This is a cost in which we have taken a loan from a bank and we have to pay its interest. This is what we called finance cost.

(c)Administration and other expenses:- Expense whose effect is directly on the business, such as giving a salary, paying rent, paying electricity bills.

When the profit and loss statement of a private limited company is made, we can calculate the total expenditure by adding these three.

Extraordinary items:- When a company once profits from selling a product. And selling that product was not the company’s professional work. And neither was this profit company to get every year, this happened only once in a sudden year. Now, this profit will neither happen in the coming year nor last year. So this is what we called extraordinary and exceptional items and when there is a profit of 10 lakhs in any company, then extra-ordinary items are counted in it.

• Calculation Of Cost of Goods Sold

To calculate the cost of goods sold for any company, we must first know the raw material purchases of the company, how much money it cost to bring the raw material purchases of the company. By adding all of these, you can calculate the cost of goods sold by any company, if you lose the remaining well.

The statement of cash flows shows the flow of cash within the business, including where it came from and how it was spent during a specific time period.

Cash flows is categorized into 3 types of activities

1 operating activities:- shown how much cash was generate from operating which make up the day-to-day running of the business.
2 investing Activities:-shown how much cash was generated from asset purchase for the business, such as equipment, regardless of whether the transaction was paid in cash or financed.
3 Financing Activities:-shows the cash that has come in or gone out of the company for the purpose of financing all of the other business activities.

Cash flow is esseintail to stay in business. if you don’t have enough cash to meet your obligation and to reinvest,then you won not be in business very long.+

the profit and loss statement and the balance sheet reports alone cannot tell you everything that you need to know to make a good business decisions

There are 3 section of cashflow statement

Net income

This figure will directly come from the bottom line of your profit and loss statement.net cash provided by operating activities this section is comprised of the net cash inflow and outflow of the day-to-day business operating for pause plumbing this includes any cash generated from the sale of plumbing produc6t and service net cash provided.

Net cash provided by investing activities

This section is comprised of the net cash inflow and outflow of any investments made in the business x purchase a truck to use in his business.so that purchase is listed here as the cash flow statement.

Net cash provided by financing activities

This section is comprised of the net cash inflow and outflow of any types of financing that supports the business operations in this example x purchase a truck so the amount of the loan that he took to purchase the truck in listed in this section as a cash inflow item net cash provided by financing activities is XXXX amount

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