The layout of the Financial Statements

Hello everyone,

Is there any rhyme reason for the lay out of the Statement of profit or Loss and the Statement of Financial Position? If so, can anybody offer a reason for it's 3 column layout?

There doesn't appear (to me) to be any logical reasoning for it's layout. I have looked back through my course books but I don't seem to find anything specifically about the layout.

The layout on the SFP seems more logical but if I were to have to learn how to layout a SPL, I would struggle to understand why it's laid out in the way it is.

Thanks,


Stuart

Comments

  • UncleboobotUncleboobot Registered Posts: 14
    So, here is an example. I am currently studying Level 3 Accounting and the image below is an extract from my text book. The question then, is how do I learn which figures are placed in which column and/or which calculations are made in which column? Hope this makes sense.

    \
  • Zoynal98Zoynal98 AATQB Posts: 20
    edited April 19
    Doubt this is going to help much...

    The proforma you are showing is very detailed, I tend to remember the main parts (see below):

    Sales (Net sales) Remember to remove sales returns
    Less: Cost of Sales ((Opening Inventory + Net purchases) - Closing Inventory)
    = Gross Profit (Net Sales - Cost of Sales)
    Add: Other Income
    = Gross Profit + Other Income
    Less: Expenses
    = Net Profit ((Gross Profit + Other Income) - Expenses)

    Then you can use logic to allocate each line item underneath the bold headings (shown above).

    Let me know if anything is unclear.
  • BertieBertie West Midlands Registered Posts: 234
    There isn't.

    You will learn what goes where through practice.

    You'll need to know what interacts with what.

    Ultimately the extra column is there to calculate sub-totals of varying sections, after which you have you're ultimate totals.

    To be honest I've never really thought of the question before.
Sign In or Register to comment.