Profit and Loss Statement Paper
04/21/2014
BSA/310

Profit and Loss Statement Paper
A profit and loss statement is a statement that shows a company’s revenue and expenses over a particular period of time. A profit and loss statement covers net sales, cost of goods sold, gross profit, and net operating income to calculate how much money a business made or lost (net income). It is important for any business to keep an accurate accounting of all transactions to ensure an accurate profit and loss statement. Kudler Fine Foods, for example, has their profit and loss statement from the year ending December 31st, 2003 made publically available. Breaking down this statement will allow us to see how this company performed in 2003.
Net Sales Net sales are calculated by taking the total amount of revenue generated from sales and subtracting sales returns and allowances. Sales returns are the loss a company receives from items that were returned for one reason or another. Sales allowances represents money that is lost by offering these returned products at a discounted rate (open box). Kudler Fine Foods generated $10,804,000 in gross sales. They incurred a loss of $7,800 due to sales allowances and returns. This equates to Kudler Fine Foods having net sales of $10,796,200 for 2013.
Cost of Goods Sold Cost of goods sold, or COGS, represents the cost of obtaining a product that is to be sold. This can be through a third party wholesaler or through a company’s manufacturing process. Buying products to resell has a more straightforward COGS. Manufacturing your own goods to sell incorporates cost of materials, labor, packaging, and logistics. At the beginning of 2013, Kudler Fine Foods had a total inventory carryover worth $467,890. They added to their inventory quite a lot, and incurred costs because of this. Factoring in purchases, labor, shipping, and