Use divisions for the Profit and Loss Statement

Divisions can be applied to income and expense line items. This allows you to track profitability of various divisions or cost centers, subsidiary businesses, projects, company branches, or sales portfolios. Divisions are created and managed as described in another Guide. This Guide describes how to use divisions to track and report on profitability.

Example 1
Brilliant Industries wants to monitor profitability of its incandescent and LED lamp manufacturing divisions. It sets up two divisions: INC and LED. All income and expenses are designated with one division or the other. At the end of each financial period, Profit and Loss Statements are generated separately for the two divisions. Combined Profit and Loss Statements can also be created comparing performance of the two divisions.

Example 2
Atlas Construction assigns divisions to each building project by year: 2016-1, 2016-2, 2017-1, etc. Transactions related to a single project are tagged with appropriate divisions. Those pertaining to the business in general are left uncoded. Profit and Loss Statements can be generated for individual projects or the entire company. If necessary, Atlas could designate separate lists of expenses and accounts on which divisions would be used for distinct project types. Concrete projects might have divisions applied on subcontractor labor, while internally performed electrical projects might have divisions applied on wages.

Applying divisions to transactions

When you record income, you will be able to select which division the income should be allocated to:

The same applies to expenses. If an expense should be spread across multiple divisions, you can split the expense to allocate the appropriate amount to each division:

The Division field is not activated until an account is selected to which divisions can be applied.

Viewing profitability by division

In the Reports tab, click Profit and Loss Statement:

Create a new report by clicking the New Report button.

Define the new report by entering a date range and selecting the desired division in the Division field. Leave the selection as Optional to see all transactions. You can add comparative columns for other divisions:

Click Create to save the report. View the report to see income, expenses and profitability of selected divisions side by side for the specified period:

Profit and Loss Statement columns for divisions only show amounts with divisions applied to them. You can check the Division Exception Report under the Reports tab to view transactions that do not have divisions. This can help you determine whether divisions were accidentally forgotten.

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