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1C Việt Nam
(20.08.2024)

What is a profit and loss statement? Importance and reporting process

Profit and loss reports help administrators understand the company's business situation, thereby making more accurate decisions. This type of report plays an important role and is required in every reporting period of a business. So how to create an Excel file to report profit and loss quickly and easily? What are some things to note when creating? Let's find out with 1C Vietnam in the article below!

1. What is a profit and loss statement?

Profit and loss report (P/L) is a report summarizing a company's business results at a certain period of time related to revenue, costs, and profits. In other words, this report will let businesses know whether the company is making a profit or losing money.

profit and loss report
Profit and loss report (P/L) is a summary report of results related to revenue, costs, and profits.

Profit and loss reports help managers, investors and stakeholders get an overview of the company's financial situation over a specific period of time. From there, administrators can adjust and make more appropriate decisions such as allocating resources, devising marketing strategies for the next quarter,...

2. Meaning of profit and loss report template for businesses

Profit and loss statements are important documents that have great significance for businesses. Specifically:

  • Provide data and information so that administrators can combine it with related papers and records to create specific business reports.
  • Help businesses find the cause of increased/decreasing revenue or low profits. From there, administrators can promptly correct errors as well as adjust strategies for the future.
  • The annual profit and loss report provided by accountants is the basis for simple tax classification.
profit and loss report
The annual profit and loss report provided by accountants is the basis for simple tax classification

3. Process of preparing profit and loss (P&L) statements

Compared to other types of general financial reports, profit and loss reports are somewhat simpler because there is less statistical data needed. However, because this is an important document, reflecting the business's operations, it needs to be accurate and timely. Below are the steps to prepare a profit and loss report for a business.

Profit and loss report
The reporting process is relatively simple

3.1 Step 1: Prepare books, papers and records

To be able to create accurate and quick profit and loss reports , businesses collect all documents, papers, debt tables, revenues and expenditures,... during the business process. To save searching time, businesses should store documents by function, category or time in the most scientific way.

Profit and loss report
Businesses need to have all documents, papers, debt tables, and income and expenses to make reports

3.2 Step 2: Select the time frame to create the report

The profit and loss statement shows the business results of the business over a certain period of time. Therefore, businesses need to specifically determine the time period for reporting, which can be 1 month, 1 quarter or 1 year, depending on the needs of each company.

Profit and loss report
Select a time frame for data statistics

3.3 Step 3: Summarize the business's revenue and expenses

Revenue and expenses are two key elements that make up the profit and loss statement . Enterprises need to collect information related to these two issues within a specific period of time. This information includes:

  • Revenue: The total amount of money earned from business activities, service provision and sales.
  • Sales costs: Costs incurred during the sales and service provision process include maintenance costs, delivery costs, insurance costs,...
  • Opportunity cost: This is not a direct cost related to business activities, opportunity costs include advertising costs, costs of materials, goods, labor, etc.
  • Financial costs: Costs related to banking and finance such as bank fees, interest rates, and costs arising from loans.
  • Other costs: Costs related to business activities such as insurance costs, warehouse maintenance, employee training costs, electricity and water costs,...
Profit and loss report
Revenue and expenses are two key elements that make up the profit and loss statement

3.4 Step 4: Calculate profit and loss over the period

Based on the compiled revenue and cost data, the business will determine profit and loss during that period by subtracting total costs from total revenue. The business can then determine the company's after-tax income (net income).

Profit and loss report
Businesses will calculate profit and loss based on compiled data

3.5 Step 5: Create profit and loss report

After completing the analysis, calculation, and arrangement of data, the business will proceed to create a report. One of the most popular tools for creating profit and loss reports is Excel. In the next part, 1C Vietnam will help businesses save time with the latest sales profit and loss report Excel file templates.

Profit and loss report
The most popular tool that supports creating profit and loss reports is Excel

4. Compile the latest standard profit and loss report form for 2024

Below are the latest and standard profit and loss report templates for 2024 compiled by 1C Vietnam. Businesses can refer to and download to customize to suit their needs.

1 - Internal profit and loss report template

This is a report showing the financial situation of the business at a certain time. This profit and loss statement includes revenue, expenses, losses, and profits.

Profit and loss report
Internal reports show the financial situation of the business at a certain time

Download the internal profit and loss report form here: Internal profit and loss report

2 - Sample profit and loss report by month and year

This profit and loss report template gives businesses an overview of the business and financial situation each month, each quarter, and each year. This helps administrators closely control the business's operations and ensure they are on track as planned.

Profit and loss report
Monthly reports help strictly control business activities

Download the profit and loss report form here: Profit and loss report by month and year

3 - Sample profit and loss report according to sales order

Some businesses use an order-based profit and loss statement template to accurately understand the profit that can be earned from the value of an order.

Profit and loss report
Order-by-order reports show profits on specific orders

Download the form now here: Profit and loss report by order

Above, 1C Vietnam has compiled the necessary knowledge as well as introduced the latest profit and loss report templates in Excel for your business reference. Besides Excel, businesses can also use 1C Vietnam's comprehensive digital transformation support software 1C:Company Management to create the fastest and most accurate reports. For more specific advice about 1C:Company Management software, please contact 1C Vietnam immediately.

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