Prepare a quick profit and loss statement

Imagine you are applying for a loan to expand your business and your bank has requested a profit and loss statement (P&L). Or your accountant wants to lodge your tax returns and is in need of your P&L.

First of all, what is it? A P&L is one of the main financial statements for a well managed business. It summarizes the income and expenses incurred during a specific period of time, usually a fiscal quarter or year. Without one, you look unworthy to a bank. And it will be more difficult (and expensive) for an accountant to prepare tax filings. As you make a transition to more professional business operations, Manager can help improve the impression you make on the outside world.

In Manager, there is a way to generate a quick P&L without having to enter all the transactions that would back it up. This assumes you already know the income and expense figures for the desired period, perhaps from earlier, simplistic record-keeping in a spreadsheet.

Create a business

On the Businesses page, click the Add Business button, then select Create New Business. Enter your business name and click the Add Business button:

Your business should be successfully created with a default structure for your chart of accounts:

Normally at this point, you would click on Customize to add new functional tabs. But if all you want is to generate a P&L statement and you know the figures, you don’t have to enable any additional tabs, as you have all you need.

You may, however, need to edit or add income or expense accounts to the chart of accounts. If so, read another Guide for instructions. For purposes of illustration, the rest of this Guide assumes the default accounts are adequate.

Record a journal entry

Let’s say you need to generate a P&L for 2020. Go to the Journal Entries tab and click the New Journal Entry button:

Then enter your figures for all applicable Income and Expense accounts. Income figures go in the Credit column and expense figures in the Debit column. Also, make sure to set the date to the last day of the accounting period for which you are creating the report:

Normally all journal entries must balance to adhere to rules of double-entry accounting principles. Since you only want to generate a P&L, you can relax the rules a bit for now. In fact, you probably want to show that your business was profitable during the period, so you would prefer debits to be less than credits.

Once you are done, click Create.

Generate profit and loss statement

Once your journal entry is saved, go to the Reports tab, click Profit and Loss Statement and finally New Report button.

Here you will need to enter the period your P&L covers. Let’s say the income and expense figures you have entered in your journal entry cover the whole year 2020. Your period should be set to be from January 1, 2020 until December 31, 2020. Optionally, you can also set Column name to FY 2016, which is an abbreviation for Financial Year 2020:

After you click Create, you will be able to view your newly-created report:

That is all there is to it. You have a professional-looking P&L for your bank or accountant.

Make a Comparative P&L

Your P&L will look even more trustworthy if you make it show multiple periods side-by-side. For example, you can show FY 2019 figures next to FY 2020 figures. In order to do that, record another journal entry with income and expense figures for FY 2019. The journal entry should be dated as at December 31, 2019.

Then edit the P&L report definition to add a comparative period by clicking the Add comparative column button and entering period details for FY 2019:

Click Update to view the modified P&L:

As you can see, now you have two periods side by side, which looks much more impressive. You can keep going to add as many periods as you like.

Create a multi-step P&L

Manager also supports custom income & expense groups, sub-groups (unlimited levels) and custom totals to cater to entities with more complex layout requirements. See this Guide for more details. Just remember: when all you want is a finished P&L, you can create one with just a few journal entries.

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