Profit and Loss Statement - Meaning and Horizontal and Vertical Format

Profit and Loss Statement

          A P&L A/c is basically a account which reveals the net profit and loss during a specific period of operation of a business. Profit and Loss Account is also known as Income Statement, Statements of Operations, Earning Statement, Revenue Statement, Operating Statement.Statement of Financial Performance. Profit & Loss A/c can be prepared in two formats. They are,

§  Horizontal Profit & Loss A/c

§  Vertical Profit & Loss A/c

Now let us look at the formats of each one of them below.

§  Horizontal Profit & Loss A/c

Particular	Amount	Particular	Amount
To trading A/c (Gross Loss from Trading A/c) Administrative Expenses To Salary To Office Rent To Printing and Stationary To Postage & Telegram To Trade Expense To Audit Expense To Legal Charges To Tax To Insurance To Telephone expense To operating Expense Maintenance Expense To repair and renewals of assets To depreciation of assets Financial Expenses To Interest on Loan To Discount Allowed To Interest on Capital To Bad debts To Discount to bills To Bank Expenses To Charities and Donations Selling and Distribution To Carriage Outwards To Advertisement Expenses To Export Duty To Commission to Sale agents To Salaries To Insurance on goods sold To Packing Expense To Sales Tax To Rent of Insurance of Warehouse To delivery Van Expense Provisions To Provisions for doubtful debts To Provision for Discount debtors To Provision for other expenses Loss To loss on sale of asset To loss by fire To Capital A/c (By Net Profit transferred to capital A/c)	XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX	By Trading A/c (Gross Profit) Non-Trading Incomes By rent received By Interest Received By Commission Received By Discount Received By Income from Investment By Interest on Drawings By Bad debts received By Profit on sale of asset By Refund of tax By Bad debts recovered By Appreciation By Capital A/c (Net Loss transferred to Capital A/c)	XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX
TOTAL	XXX	TOTAL	XXX

§  Vertical Profit & Loss A/c

Particular	Schedule No	For the Current Year	For the Previous Year
Income           Sales           Increase/Decrease in WIP/finished stocks            Total Income                                     Income Expenditure            Cost of Raw Materials & Stores Excise Duty Employees Remuneration & Benefits Other Expenses Interest Depreciation Total Profit before Taxation & Extraordinary items (Income – Expenditure) Extraordinary items Profit for the current year Prior period adjustments Profit Before Taxation Provision for Taxation Profit After Taxation Balance of Profit brought from previous year Total Profit Available for Appropriations Appropriations Proposed Dividend Corporate Dividend Tax Transfer to Debentures redemption Reserves Transfer To General Reserves Transfer To Any Other Statutory Reserve Balance of Profit carried forwarded to next year	12 13 14 15 16 17 18 19 20 21	XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX	XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX
Total of Appropriation & Balance carried forward		XXX	XXX

Schedule 12: Sales

Particular

Sales                                        XXX

(-)Sales Return                        XXX

                     Net Sales                      XXX

Schedule 13 : Other Incomes

          Discount Received                                       XXX

          Commission Received                                 XXX

Rent received                                               XXX

Interest                                                         XXX

New Reserves for Discount on Creditors    XXX

Royalties Receive                                        XXX

Old Reserves for Discount on Debtors        XXX

                                                                               XXX

Schedule 14: Increasing Stock

          Closing Stock                          XXX

          (-)Opening Stock                     XXX

                                                           XXX

Schedule 15: Cost of Purchases

          Purchases                                                       XXX

          (-) Purchases Return & Goods as Samples    XXX

                                                                                 XXX

Schedule 16: Employee Remuneration & Benefits

          Wages & Salary                                 XXX

(+) O/s Wages & Salary                    XXX

(-) Prepaid Wages & Salary              XXX

                   Total                                         XXX

Schedule 17:

          Freight Charges                                           XXX

          General Expenses                    XXX

(+) O/s                                               XXX

(-) Prepaid                                         XXX           XXX

Advertisement                                                      XXX

(+) Goods Distributed on Samples                       XXX

Bad Debts                                           XXX

(+) New Reserves                               XXX

(-) Old Reserves                                 XXX           XXX

New Reserves Discount on Debtors                      XXX

Old Reserves on Discount of Creditors                 XXX

Preliminary Expenses Written Off                         XXX

                                                                               XXX

Schedule 18:                 

Interest Paid                                       XXX

(+) O/s                                                XXX

(-)Prepaid                                           XXX

                                                           XXX

Schedule 19: Depreciation

Depreciation on Land & Building, Plant & Machinery, Furniture and other assets.

Schedule 20: Extraordinary Items

Any other extraordinary items(Add in case of Income or Less in case of Expenses)