What is a Profit and Loss Statement? What of the firm financial data is in this report?
- Profit and Loss, a.k.a Income Statement is the statement of activities relevant to income and expenses of the firm.
- It uses all Income, Cost of Goods Sold (if any) and Expense Accounts on the Chart of Accounts.
- Profit and Loss Statement covers a period of time, e.g. month, quarter, annual.
- What is a Balance Sheet?
- Balance sheet is a "snapshot" of the firm's financial position at a specific moment in time. It provides the data on what the firm owns and what it owes.
- Components of the Balance Sheet
- Assets, e.g. cash, advanced client costs, property (buildings, furniture, equipment)
- Liabilities, e.g. Monies in Trust, notes payable, wages payable, taxes payable,
- Equity, i.e. book value of the firm, e.g. paid in capital, retained earnings, net income. NOTE: Owner's Equity on the Balance Sheet is not an indication of the firm's market value.
- What is a Trial Balance Report?
The trial balance is a report run at the end of an accounting period, listing the ending balance in each general ledger account. The report is primarily used to ensure that the total of all debits equals the total of all credits, which means that there are no unbalanced journal entries in the CosmoLex system.
- Why doesn’t 3500: Income and Expense Summary on my balance sheet match the net income on my Profit and Loss?
- Check the date range filter to ensure both the Balance Sheet and the Profit and Loss are identical. If the amounts do not match, the balance sheet may include the net income from the prior year. You must manually move the amount from the prior year into retained earnings at the beginning of the new fiscal year.
- You must manually move the amount from the prior year into retained earnings at the beginning of the new fiscal year
- At year-end, how do I move the amount in 3500:Income and Expense Summary to 3400: Retained Earnings?
- At this time, CosmoLex does not have the automatic functionality to move Net Income to Retained Earnings. Until the feature is added, we recommend:
- Best Practice: This function is best done by your accountant after all adjusting entries have been made. Your accountant can use 3500:Income and Expense Summary and 3400: Retained Earnings to make these changes.
- Why is my Trial Balance Report’s “Debit” and “Credit” column totals are not matching?
Only possible scenarios we can think of are:
- If report is for prior accounting periods, your accountant may not have completed migrating income to retained earning at the prior-year-ends. Details about how to do it is listed in FAQ item “At year-end, how do I move the amount in 3500:Income and Expense Summary to 3400: Retained Earnings?”
- If report is for current accounting periods, your accountant may have completed migrating income to retained earning for the current accounting period and report is being generated after that.
- If the debit and credit columns are not matching, compare the difference with 3400:Retained Earnings value on the report.
Modified on: Wed, 1 Mar, 2017 at 9:11 AM
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