Prepare the format of statement of profit and loss and explain its items.

Explanation

The following are the items on the profit and loss statement:


1. Revenue from Operations: Revenue derived from an organization's core operating activities. The revenue sources for financing and non-financing businesses differ. Interest, dividends, and other types of financial services are revenue sources for financing organisations, whereas revenues received through sales of products and services and other operating activities are revenue streams for non-financing companies.


2. Other Incomes: These are earnings that are not derived from any operating activity. These are the sources: capital gains on investments, interest income, and dividends.


3. Expenses: This category includes all costs, such as the cost of materials utilised, the cost of purchasing stock in trade, as well as changes in inventories, stock in trade, and work in progress.