Fix zip in the Profit and Loss Statement effortlessly

Aug 6th, 2022
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How to fix zip in Profit and Loss Statement online

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How to Fix zip in the Profit and Loss Statement

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so I just finished up a meeting with a potential client this guy is a realtor and he rolls up to the meeting in $100,000 Mercedes we sit down and about five minutes into the meeting this gentleman starts crying saying PK I need financing but I've been declined by five different banks what do I do because I said Scott let me see your profit and loss statement I take one look at his profit and loss statement and I start crying so what we're gonna do today is I'm going to show you exactly how to put together a profit and loss statement what a profit and loss statement is why it's important and most importantly at the end of this video I'm going to give you a template that you can use for your very own business so what exactly is a profit and loss statement or pnls are referred to it's nothing more than your gross sales minus your cost minus your fixed expenses over a specified period of time this could be monthly quarterly or annually why are P&L so important three big reasons number one...

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If the ending inventory is overstated, cost of goods sold is understated, resulting in an overstatement of gross margin and net income. Also, overstatement of ending inventory causes current assets, total assets, and retained earnings to be overstated.
Inventory errors can cause the ending inventory balance to be incorrect, which in turn affects the cost of goods sold and profits. Given the severe financial statement impact of inventory errors, one should be aware of the types of errors that can occur in an inventory system.
An understatement of inventory means decreasing COGS on the income statement, which increases net income. On the balance sheet, increase the inventory value and decrease retained earnings. If there is an overstatement of inventory, increase COGS by the dollar amount, which produces a lower net income.
Errors in the valuation of ending inventory, which is on the balance sheet, produce an equivalent corresponding error in the company's cost of goods sold for the period, which is on the income statement. When cost of goods sold is overstated, inventory and net income are understated.
Although immediate correction of errors is preferable, most inventory errors will correct themselves over a two-year period. However, even if an error corrects itself, there may still be a need to restate comparative financial-statement information.
Inventory Change in Accounting The full formula is: Beginning inventory + Purchases - Ending inventory = Cost of goods sold. The inventory change figure can be substituted into this formula, so that the replacement formula is: Purchases + Inventory decrease - Inventory increase = Cost of goods sold.
Inventory errors can cause the ending inventory balance to be incorrect, which in turn affects the cost of goods sold and profits. Given the severe financial statement impact of inventory errors, one should be aware of the types of errors that can occur in an inventory system.
Income statement effects. An incorrect inventory balance causes an error in the calculation of cost of goods sold and, therefore, an error in the calculation of gross profit and net income.
Definition of Overstating Inventory Overstating inventory means that the reported amount for the cost of a company's inventory is greater than the actual true cost based on accounting rules. In other words, the reported amount is: Incorrect. Too high.
If there is an overstatement of inventory, increase COGS by the dollar amount, which produces a lower net income. On the balance sheet reduce the ending inventory to reflect lower-ending inventory, and decrease retained earnings by the dollar change to net income.

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