Which costs belong in the income statement and which do not?
October 17, 2023 | 50,00 EUR | answered by Jonas Kessler
Dear tax advisor,
I have a question regarding the profit and loss statement in my company. I operate a small online trading company specializing in the sale of handmade jewelry. In recent months, I have noticed that my profit and loss statement does not look as good as expected. I have a feeling that I may have included some costs incorrectly in the profit and loss statement.
My current costs include material costs for the jewelry, rent for my office, shipping costs, advertising costs for my online presence, salaries for my employees, and various other expenses. I am wondering if all these costs should actually be included in the profit and loss statement or if there are certain costs that should not be considered.
I am concerned that I may have incorrect information in my profit and loss statement, which could lead to a misinterpretation of my company's profit. I want to ensure that my profit and loss statement is accurate and includes all relevant costs to get a clear picture of my financial situation.
Could you please explain to me which costs should be included in the profit and loss statement and which should not? Are there specific expenses that I may have accidentally included in my profit and loss statement that do not belong there? I would greatly appreciate your help in reviewing and, if necessary, correcting my profit and loss statement.
Thank you in advance for your support.
Sincerely,
Emma Karpinski
Dear Mrs. Karpinski,
Thank you for your inquiry regarding your profit and loss statement for your online trading company. It is important that this is created correctly in order to get an accurate picture of your financial situation. I understand your concerns and will be happy to help clarify which costs should be included in the profit and loss statement and which should not.
First of all, generally all costs directly related to generating income should be included in the profit and loss statement. In your case, this would certainly include the material costs for the jewelry, office rent, shipping costs, advertising costs for online presence, and employee salaries. These costs are direct operating expenses that are directly related to the production and sale of your products.
However, there are also costs that should not be included in the profit and loss statement. These may include personal expenses not directly related to the company, such as personal purchases or holiday expenses. These should be handled separately and not included in the profit and loss statement.
It is also important to note that certain costs such as depreciation or provisions for future expenses must be taken into account in the profit and loss statement. These can have an impact on profit and should not be overlooked.
To ensure that your profit and loss statement is accurate, I recommend carefully reviewing all of your expenses and ensuring that only those costs directly related to the operation of your business are included. If you are unsure whether certain costs should be included, it is advisable to consult a professional tax advisor who can assist you in reviewing and correcting your profit and loss statement.
I hope this information is helpful to you and I am available for any further questions.
Sincerely,
Jonas Kessler
