What’s included in the profit and loss - standard report?

The Sales section includes all nominal accounts related to revenue. The accounts displayed vary depending on the business type:

• Product-based businesses – Revenue from selling goods
• Service-based businesses – Revenue from providing services (e.g., consultations)
• Project-based businesses – Revenue from one-time projects, including transactional accounts
• Recurring revenue businesses – Income from ongoing sales of goods or services, such as:
  • Subscription fees
  • Renting or leasing assets
  • Licensing content

Sales income includes both paid and outstanding invoices based on accrual accounting.

Direct expenses include costs directly related to producing goods or services. These may include:

• Raw materials
• Labour costs
• Manufacturing overhead
• Service-related costs such as employee wages and supplies

Managing direct expenses effectively helps maintain profit margins.

Gross profit is calculated as:

Total Sales minus Direct Expenses equals Gross Profit.

If expenses exceed sales, a Gross Loss appears.

Gross Profit Margin measures how much of your revenue exceeds direct expenses. It's calculated as:

(Gross Profit ÷ Total Sales) × 100

A higher percentage indicates efficient revenue generation, while a lower percentage suggests high production costs or pricing issues.

Overheads are costs not directly tied to producing goods or services. These may include:

• Wages for non-sales employees
• Rent and utilities
• Advertising and marketing costs
• Business travel expenses

Suspense accounts may also appear under overheads.

Net Profit represents the overall profitability after deducting all expenses:

Gross Profit minus Overheads equals Net Profit.

A positive net profit indicates financial success, while a negative net profit signals a loss. Net profit is also used to calculate tax liabilities.

Net Profit Margin measures net income as a percentage of total sales:

(Net Profit ÷ Total Sales) × 100

This helps investors and business owners evaluate profitability.

Businesses can track their Net Profit as a cumulative YTD value, especially for tax purposes.

Each category’s totals can be displayed as a percentage of their subsection.

Calculation:

(Ledger Account Balance ÷ Subsection Total) × 100

This feature is available when you select the Show Accounts option.