Professor Timothy Groves
October 21, 2012
Profit and Loss Statement Paper
Before beginning, it should be noted that although this project is to be for a Profit and Loss (P&L) Statement, only an Income Statement is available at the Kudler Fine Foods website (Apollo Group, 2011). However, Income Statements and P&L Statements are, for all intents and purposes, the same thing.
With that said, it cannot be determined conclusively by reading the Income Statement for Kudler Fine Foods if the report is monthly, quarterly or yearly—or if the reports are constructed on a different fiscal schedule. The date at the top, however, reads “For the Year Ended December 31, 2003”. For this reason, it was determined to treat this report as an annual report with a fiscal year ending December 31, 2003.
An Income Statement is important to a company because it is used to record and calculate the costs, expenses, taxes and profits of a company over a specified period of time (Nickels, W. G. et al. 2010). It breaks down into an itemized list, these expenditures and profits so readers may easily follow the flow of information. Income Statements have the following parts:
• Cost of Goods Sold (COGS)
• Gross Profit
• Operating expenses/ Net Operating Income
• Net Operating Income/Net Income
The information below will cover the significance of each of these 5 parts and will speak to the importance of each with regard to Kudler Fine Food’s performance in 2003.
The Revenue of Kudler Fine Foods consists of Gross Sales minus Sales Returns and Allowances. This is to mean that Sales Returns and Allowances are subtracted from whole amount of money brought in through all sales (Gross) made over the course of the year. Sales Returns and Allowances are significant in calculating revenue because they represent the...