Home » Aron Govil- Steps to Create a Profit & Loss Statement from Start to Finish

Aron Govil- Steps to Create a Profit & Loss Statement from Start to Finish

You have been tasked with creating a profit and loss statement from scratch says Aron Govil.

Here is a suggested process to use in order to complete your project.

Start by gathering all necessary information related to the business or company that you will be creating the P&L for. If you do not have this information readily available, begin researching in order to gather it. This will include but is not necessarily limited to: cost of goods sold, fixed assets, variable expenses, marketing expenses, payroll costs including salaries and wages paid out. You will need both an income statement and also a balance sheet (a balance sheet can be created after). You should then total each line item separately on an Excel spreadsheet (or another program if preferred).

Profit & Loss Statement

  • Do not worry about formatting in this step. Our main objective is to get the information in a place where it can be organized and formatted properly. You should next choose one section of your spreadsheet to organize first, for example, COGS. If you are confused on how to sort data there are plenty of resources online that will show you how (YouTube videos are very helpful) or if you work with numbers often already then I suggest organizing the cells manually by sorting them alphabetically or numerically depending on what makes sense within each category. Once sorted, apply necessary formatting so that everything looks uniform and professional, including font size, font type, font color. Do the same for fixed assets, revenue/sales, and variable expenses.
  • Once complete, highlight each section and insert a subtotal line before the grand total at the bottom of your spreadsheet says Aron Govil. This will be helpful when filling out your income statement as you can easily see where to input information without having to go back and forth between spreadsheets. Ensure that all necessary formatting has been apply here as well, including font size, font type, font color. Next attach the balance sheet spreadsheet to the end of this P&L document (this is not mandatory but it makes organization easy). Now everything should be format nicely within one document with headers for each section tab accordingly at the top of your document (see example below)
  • Go through this now completed document carefully making sure that every cell works properly and that all subtotals are present. Ensure that each section follows an organized numerical format, that there are no errors or typos, and that everything flows well together. This means that the revenue should be list before the sales tax apply for example. It also would not make sense to have COGS listed after variable expenses so this needs to be take into consideration as well when creating the flow of your document.
  • Once completed carefully go back through your document again looking closely at each subtotal line making sure it is accurate once you input the numbers from the balance sheet (the numbers from here will need to add up to match on both documents). For example if cash on hand in your current assets adds up on the balance sheet to $100, if you have a “total current assets” subtotal of $105, something is off. Make sure that the balance sheet matches up to what you have created on your P&L.
  • Once complete and all necessary information has been input correctly. Highlight the entire document go to “table” in the top toolbar then select “convert to table”. This will help when filling out your Excel spreadsheet needed for your final income statement. As it allows you to easily sort items by category.
  • Additionally, feel free to add any other charts/graphs you would like included. With this project under an “Excel Workbook” section within your P&L document (see example below). This can be helpful for visual clarification but is not necessary.
  • Once completed create 3 more copies of this document. For each copy, fill out each section accordingly so that every item matches the exact same number. The only section that should change between each document is the ending net income number.

Conclusion:

Once completed, attach each copy to your final income statement document explains Aron Govil. You will need to insert a subtotal line at the bottom of each section. And insert a grand total at the bottom of your document. Make sure to highlight everything properly between each section, make all necessary format changes. And ensure that the numbers add up correctly.

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