#Profit_and_loss_account:
The profit and loss statement, as its name suggests, is prepared to determine the profit or loss of a financial unit and includes a summary of revenues and expenses for a given period of time.
This bill is usually prepared in two ways:
1- Tech Stage I
2- Two-stage
Profit and loss statement in a single step:
In this method, all revenues are first added together, then all expenses are brought under them, and finally, from the difference between them, we arrive at the profit or loss before tax deductions, which are deducted from taxes (if the institution has a profit). We will arrive at the profit or loss after deducting taxes or the special profit or loss.
Profit and loss statement in two steps:
In this method, the operating revenues are first mentioned, followed by the operating expenses, which are the difference between the two and the operating profit or loss. Then, the non-operating revenues and non-operating expenses are mentioned. We reach the profit and loss before tax deduction, which with the tax deduction we will reach the profit and loss after tax deduction or the special profit and loss.
The profit and loss statement is also called the income statement or the statement of operations. The most important part of the profit and loss statement is the final part, the special profit or loss, which shows the result of the activities of a business unit, whether the business unit was profitable during the financial period of its activities or not.
In general, the profit and loss of a service unit is as follows:
Service Institution
Profit and Loss Statement
For the fiscal year ending 29/12/××
Revenues:
Service Revenue ××
Deductible expenses:
Rental Cost ××
Insurance costs ××
Rights Cost ××
Water, electricity and telephone costs ××
Total costs (××)
Profit (loss) before tax deductions ××
Finance (×)
Special profit (loss) ××
Now, according to the above information and according to the assumptions of the previous lessons, the following form is prepared for the Mohammad and Hassan Service Institute:
Mohammad and Hassan Service Institute
Profit and Loss Statement
For the fiscal period ending
2/31/84
income :
Educational services income 5,000,000
Expenses are deducted:
Rental Cost 1.000.000
Rights Cost 1.000.000
Water, electricity and telephone costs 250.000
Total expenses 2.250.000
Profit and (loss) before taxes 2.750.000
Tax at 25% (687.500)
Special profit (loss) 2.062.500
* Special profit (loss): If the revenues of a financial unit are more than its expenses, that financial unit has a profit and if the expenses are more than its revenues, the financial unit has a loss.
** Operating income and operating expenses are those that are directly related to the current and main operations of the company, otherwise the term non-operating income and expenses are used. For example, in Mohammad and Hassan Service Institute, educational income is part of operating income, and if the same institution makes a profit by selling a car because it is not part of its current operations, its income is considered non-operational.
Mehdi Koh Soltani (Financial Services; Accounting; Tax Financial Advisor):
Tabriz Accountants Group
https://t.me/joinchat/BnzBsTuioTshiXBwf9bBPQ