If the report shows a gross loss this means there is not enough to cover the overheads and that the following could have occurred:-
- The mark up on the sales price is too low
- There are too many discounts being given to customers
- Not all direct costs have been on-charged to the customer as they should have been
A review of the systems in place will be necessary to correct this problem and save the business from financial trouble.
profit and loss report can and should be prepared regularly during the
financial year for the business owner to analyse, however they won't
show expenses such as depreciation of fixed assets which is usually only
calculated by an accountant at the end of a financial year. It is
inserted underneath the Net Profit and deducted to show the Taxable Profit.
Here are some alternatives to the various terms used:-