Some parts of a profit and loss account, part 1

Some parts of a profit and loss account, part 1

Part of the first and most important account of losses and profits, the product of sales lines. Companies should be consistent from year to year when they pick up sales. For some companies is the time of the recognition of the revenues from sale of a major problem, especially when the final customer acceptance depends on trials or other conditions that must be met. For example, time where an advertising agency reported revenues for a campaign for its prepared client? When the work is completed and sent to the client for approval? When the client approves it? When ads appear in the media? And when billing is complete? These are the questions that a company must decide to report income from the sale, and they must regularly each year, and the timing of reporting on the financial status is noted.

The following line in a profit and loss account is the cost of goods sold fresh. There are three methods for cost of goods sold expense ratio. One is called "first of all, first out" (FIFO). Another is the "last in-last-out" (LIFO) and later is the average cost method. COGS cost is a huge element in a profit and loss account and how it reported may significantly affect the bottom line reported.

Other articles in an account of profits and losses include impairment losses. An enterprise should regularly inspect the stock to determine with care any losses due to theft, damage and deterioration and lower the cost of the method of application market (LCM). Bad debt are also an important role in the profit and loss account. Bad debts are due to a company of customers who have purchased credit (accounts receivable), but will not pay. Once more time when bad debts are reported of crucial importance. Connect before or after each collection efforts have been exhausted?

Some parts of a profit and loss account, part 1 - Internet Business Online News