own business

jkcjkc Well-KnownPosts: 166Registered
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.

Comments

  • alicemaylaraalicemaylara Trusted Regular Posts: 259Registered
    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
  • alicemaylaraalicemaylara Trusted Regular Posts: 259Registered
    Oh that PandL didn't come out as I planned. Sorry I'm using my iPhone which is hard to type with !
  • jkcjkc Well-Known Posts: 166Registered
    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
  • EsmeEsme Experienced Mentor Posts: 711Registered
    Sales
    Less cost of sales (opening stock + purchases - closing stock)

    = Gross Profit

    Less overheads

    = Net Profit
  • alicemaylaraalicemaylara Trusted Regular Posts: 259Registered
    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 :)
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