Answer to Question #67365 in Accounting for Soumedha Ramkhelawon
comments on a consolidated profit and loss account.
Consolidated profit / loss is presented by the company at the end of the period after the completion of a sum phase of accounting cycle. This report should be presented according to the quality of accounting information so as to provide accurate and reliable information to the user. Consolidated profit / loss is also a healthy indicator of whether or not the condition of the company during a certain period. Consolidated profit / loss is systematically compiled reports of revenues and expenses during the accounting period. Account balances of revenue and expense account balances are counted to know the profits / losses of companies in the period. Constituents of the profit / loss Basic elements contained in the profit / loss consists of income and expenses. These two aspects are to be recorded in the profit / loss at the end of the period. a. Income (revenue). Revenue represents an asset value which resulted in the increase in capital value. Revenue is divided into the gross revenues and revenues outside the business. Operating revenues are revenues obtained by the company due to the company’s main activity, such as service revenue. Revenue from outside the business is income derived from activities outside the company’s corporate business, such as interest and rental income. b. Expense. Expenses are the costs incurred by the company to obtain economic returns. This resulted in capital expenditures for the company to be reduced. Expenses are divided into operating expenses and expense out of business. Operating expenses are costs incurred to finance the company’s main activities, such as salaries, electricity and telephone expenses, administrative expenses, and transportation expenses. Expenses outside the business is the cost incurred to finance activities outside the company’s main activities, such as interest expense.