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jkc
jkc Registered Posts: 166 Dedicated contributor 🦉
in AAT Level 3 (Level 6 in Scotland)
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.

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  • alicemaylara
    alicemaylara Registered Posts: 259 Dedicated contributor 🦉
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    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
    alicemaylara Registered Posts: 259 Dedicated contributor 🦉
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    Oh that PandL didn't come out as I planned. Sorry I'm using my iPhone which is hard to type with !
  • jkc
    jkc Registered Posts: 166 Dedicated contributor 🦉
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    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
    Esme Registered Posts: 711 Epic contributor 🐘
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    Sales
    Less cost of sales (opening stock + purchases - closing stock)

    = Gross Profit

    Less overheads

    = Net Profit
  • alicemaylara
    alicemaylara Registered Posts: 259 Dedicated contributor 🦉
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    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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