own business

jkc

hi ive just had a question about a ( very)recent start up business owned by member of my familly
do you add the amount of value added stock to net profit.
also i have loss figure but most of money made has gone into stock does it mean we have still made a loss
or will it increase the profit?
need some help with profit and loss.
not started fra yet so a bit lost.
jkc.

alicemaylara

Not sure I understand that but

Any stock left at the end of the year is an asset which goes both on the p and l and balance sheet. It is deducted from the cost of sales ie

Sales. X

Cos
Purchases. X
Less closing stock. (x)
(x)

Gross profit. X

Less expenses (x)

Net profit/loss X

alicemaylara

Oh that PandL didn't come out as I planned. Sorry I'm using my iPhone which is hard to type with !

jkc

hi thanks
so
sales
less cost of purchases
less closing stock
= gross profit
less expenses
= net profit
the muds a bit clearer now thanks again
jkc

Esme

Sales
Less cost of sales (opening stock + purchases - closing stock)

= Gross Profit

Less overheads

= Net Profit

alicemaylara

Yeah what the above posts says sorry that p and l really didn't make sense. You minus the closing stock from purchases effectively adding to gross profit