Classification of the statement

It is very important to format a profit and loss statement so that it is appropriate to the business being conducted.

Title section

  1. Name of owner: the name of the owner must be stated on the report. Where a business name is used, for example ‘Anne’s Clothing Co. that name also should be stated on the report.

  2. Period of the report: the time period of trading must be shown on the report. This must include the words ‘for period ended’, which indicates that the trading results were derived over a period of time. It is usual practice to indicate also the length of the period, for example ‘for the year ended…’

Operating revenue section

Operating revenue for retailers and wholesalers usually consists of sales less sales returns and allowances.