Summary: Impacts To The Profit And Loss Statement
Impacts to the Profit and Loss Statement
Nicole T. Le Blanc
Kaplan University
AB299: Unit 6
Impacts to the Profit and Loss Statement As Tim was informed about new business around his coffee shop, he is expecting that sales should increase. Tim needs too to create a pro forma income statement to be able to plan and look at his future projections in his business operations to see if the projections determine a profit or a loss. If need be he can make operational changes such as increasing prices or decreasing costs before these projections become reality that way he can prepare for the potential increase in sales. After completing the pro forma income statement and looking at the projected increased income earned and expenses for year 2012, the forecast is that the expenses, salaries, rent, supplies, lease, interest and insurance and taxes will increase and depending on tangible assets, the depreciation amount could change in 2012. The expenses that will increase due to operational needs, like salaries and supplies. For the increase in salaries, Tim will need to have more labor to cover the projected customers, therefore the salaries will increase. The same goes with supplies; he will be generating more products so he will have to adjust his supplies budget to accommodate the revised supplies that are …show more content…
Tim projected that 2012 increases would be about 10%, due to the potential rise in net sales; therefore the increase is due the projected revenue. The increase will affect those expenses that are operational; therefore the bottom line is that there is a substantial net profit from the previous year. If Tim does achieve this projected 10% increase for the year 2012, Tim should continuously update his projections on the pro forma statement monthly or even on a quarterly basis, that way he can be assured that his projections are as accurate as
Nicole T. Le Blanc
Kaplan University
AB299: Unit 6
Impacts to the Profit and Loss Statement As Tim was informed about new business around his coffee shop, he is expecting that sales should increase. Tim needs too to create a pro forma income statement to be able to plan and look at his future projections in his business operations to see if the projections determine a profit or a loss. If need be he can make operational changes such as increasing prices or decreasing costs before these projections become reality that way he can prepare for the potential increase in sales. After completing the pro forma income statement and looking at the projected increased income earned and expenses for year 2012, the forecast is that the expenses, salaries, rent, supplies, lease, interest and insurance and taxes will increase and depending on tangible assets, the depreciation amount could change in 2012. The expenses that will increase due to operational needs, like salaries and supplies. For the increase in salaries, Tim will need to have more labor to cover the projected customers, therefore the salaries will increase. The same goes with supplies; he will be generating more products so he will have to adjust his supplies budget to accommodate the revised supplies that are …show more content…
Tim projected that 2012 increases would be about 10%, due to the potential rise in net sales; therefore the increase is due the projected revenue. The increase will affect those expenses that are operational; therefore the bottom line is that there is a substantial net profit from the previous year. If Tim does achieve this projected 10% increase for the year 2012, Tim should continuously update his projections on the pro forma statement monthly or even on a quarterly basis, that way he can be assured that his projections are as accurate as