Profit and Loss Account
The profit and loss account (spelling by HGB , according to Duden profit and loss account , abbreviated P & L ), in Switzerland income statement , in addition to the balance of a substantial part of the financial statements and the external accounting ( accounting ) of a company . It shows income and expenses for a specific period, in particular a financial year , and thus shows the type, amount and sources of entrepreneurial success from a financial perspective. If the returns predominate, the success is a gain , otherwise a loss .
In the profit and loss account, the success of a company is determined by a "period calculation"; it takes into account all data relevant to success for an accounting period . Independent of the profit and loss account, the internal accounting system ( cost and performance accounting ) determines the profit or loss, which works out the profit or loss on the basis of key business figures .
Legal basis in Germany
According to German Commercial Code (HGB) , at the end of each financial year the merchant has to compile a comparison of expenses and income. The Commercial Code and the tax laws as well as the international accounting standards (the International Financial Reporting Standards (IFRS) and the United States Generally Accepted Accounting Principles (US-GAAP)) contain detailed regulations on the formal structure and the content to be included. The profit and loss account is subject to statutory auditing and disclosure obligations . Only commercial partnerships and sole traders can waive publication according to the Publicity Act if explanatory information on the earnings situation is attached to the balance sheet.
Monthly income statement
Many companies prepare a complete balance sheet and income statement every month - just a few days after the end of the month . This gives an up-to-date overview of developments during the financial year. This avoids surprises only after the end of the financial year; Wrong developments can be corrected at an early stage. Financially relevant special incidents can be appropriately distributed over the months. Examples: company holidays , major repairs, bad debts .
Account or scale form
The profit and loss account can be structured in accounts or in a graduated form. The account form shows the result as a balance on the corresponding account side: on the debit side in the event of a profit, on the credit side in the event of a loss. The graduated form arranges the individual items one below the other and arrives at the period result via an update or extrapolation in several intermediate steps. Once the form has been chosen, it must usually be retained; any deviations must be justified in the appendix . The graduated form is only prescribed in HGB for corporations and corporations & Co. (e.g. GmbH & Co. KG).
Gross or net principle
According to the gross principle , the commercial law expense and income types must be listed as individual items in the income statement. Offsetting, i.e. offsetting income and expenses in advance so that they no longer appear as individual items in the income statement, is generally not permitted. Exceptions exist for small and medium-sized corporations, which are allowed to combine certain positions in order to protect themselves from competitive insight. However, this procedure, known as the net principle , does not release you from the need for a detailed chart of accounts from which the netted profit components must emerge.
Total cost method or cost of sales method
In IAS 1.92, the cost of sales method is preferred to the total cost method, as it provides information that is more relevant to decision-making for addressees, despite considerable discretion in the allocation of expenses to functions. US-GAAP prescribes the cost of sales method.
The data basis for the total cost method comes mainly from financial accounting ; The cost of sales method is also dependent on internal accounting and requires cost center accounting (or some other detailing of the accounts according to functions).
- The total cost method takes into account all costs that have arisen in the accounting period under consideration for the provision of operational services, and compares them with all the revenues generated. Since costs and revenues in the production of economic goods do not always fall in the same period (for example, goods are not necessarily sold in the same period in which they were produced), this method requires changes in the inventory of semi-finished and finished goods ( inventory at production costs ) are deducted. In this way, comparable values are obtained for determining the operating result . Inventory reductions are booked as expenses and inventory increases as income. The same applies to in- house work , i.e. work that is not sold but consumed in-house.
- With the cost of sales method, the sales revenue for a period is only compared with those costs that were incurred for the products actually sold (cost of sales).
A second major difference is:
- the total cost method groups the costs according to cost types ( material costs , personnel costs , depreciation );
- cost of sales, however groups the costs by cost make ( production , sales , administration ).
The UKV / are cost centers more meaningful for short-term (e.g. monthly) profitability calculations. This makes it easier to determine the operating results for individual products or product groups. The breakdown by cost type is only possible after conversion and not always based on the causer.
Previous year's amounts
In addition to the data for the current year, according to HGB and IFRS, the previous year's values are to be given for comparison, and according to US-GAAP the values of the past three years are to be given. If an item is no longer available in the current financial year, this inevitably leads to the disclosure of blank items. The opposite amounts must be comparable, otherwise explanations must be included in the notes.
Determination of results and use of results
All of the income statement items listed below in accordance with Section 275 of the German Commercial Code (HGB), from sales to annual net income / net loss , are used to determine the company's success . Stock corporations then have to add further information about the changes in the capital and revenue reserves and thus about the appropriation of the result ( AktG ). This information, which can be made in the appendix, comes from the proposal for the appropriation of profits made by the board . According to IFRS and US-GAAP, the appropriation of profits is not included in the income statement, but is included in the statement of changes in equity (equity statement ).
Both methods of determining success produce several interim results when calculating the annual surplus. Thus, the sources of success can be seen and the company's earnings realistically assess ( success cleavage ).
According to the German Commercial Code, a distinction is made between the “ result of ordinary business activity ” and the “extraordinary result”. The “result from ordinary business activities” includes expenses and income that are typical for the company's operational purpose . It contains, on the one hand, the operating result , which arose from the statutory process of providing services , and, on the other hand, the financial result , which includes regular but non-company transactions ( financing and capital investment transactions ). The "extraordinary result" summarizes non-company success components. This includes unusual and rare incidents that are not related to the actual business activity and whose repetition is not expected. While the operating result can be expected to contain a dregs that can be achieved in the long term, a high level of volatility can be assumed for non-operating results .
The most important success components according to IFRS and US-GAAP are the “result from continuing operations” and the “result from discontinued operations”. If a part of the company, i.e. a division or subsidiary , was shut down or sold, its result must be reported separately. This also applies when the task is planned with sufficient certainty.
The interim results of the individual accounting standards are only comparable to a limited extent. An example: If a subsidiary is sold, the proceeds belong to the “result from discontinued operations” according to IFRS. According to the German Commercial Code (HGB), it is usually included in the “extraordinary result”. However, if such a sale is not atypical for the company, it must be added to the "result from ordinary business activity". Generally valid comparison rules cannot therefore be established.
According to the commercial code in Germany and the company code in Austria
According toand HGB, the income statement must contain the numbered items listed below (sub-items are not included here). This is the minimum structure. A deeper breakdown is permitted if it does not impair the clarity and clarity; further items can be included if they are not covered by the mandatory items.
A shortening of the structure is only possible for companies for which no special forms are required. In addition, the amount must be insignificant and the clarity of the income statement must be increased by the shortening. Small and medium-sized corporations may offset items 1–5 according to the total cost method, items 1, 2, 3 and 6 according to the cost of sales method and show them as gross profit .
In Austria the structure is regulated byand UGB. The items after the annual surplus can be specified in the income statement or in the notes.
|Structure of the income statement according to HGB and UGB|
|Total cost method||Expense of sales method|
|HGB||UGB||Designation (different designation according to UGB in italics)||HGB||UGB||Designation (different designation according to UGB in italics)|
|2.||2.||Increase or decrease in stocks of finished and unfinished products (UGB: change in stocks of finished and unfinished products and services that cannot yet be billed)||2.||2.||Production costs of the services provided to achieve the sales|
|3.||3.||other own work capitalized|
|4th||4th||other operating income (from ordinary business activities, insofar as cannot be allocated to other items)||3.||3.||Gross profit on sales|
|5.||5.||Cost of materials (raw materials, consumables and supplies, purchased goods and services) (UGB: costs for materials and other purchased manufacturing services)||4th||4th||Distribution costs|
|=||=||Gross result (according to the total cost method)|
|6th||6th||Personnel expenses (wages and salaries, social security contributions, pension provision and support)||5.||5.||general administrative costs|
|7th||7th||Depreciation ( fixed assets (except financial assets), unusual depreciation on current assets )||6th||6th||Other company income|
|8th.||8th.||other operating expenses (from ordinary business activity, insofar as cannot be allocated to other items)||7th||7th||other operating expenses (only expenses that cannot be allocated to manufacturing, administrative or sales costs)|
|=||9.||Operating profit||=||8th.||Operating profit|
|9.||10.||Income from participations (only current income)||8th.||9.||Income from participations (only current income)|
|10.||11.||Income from other securities and long-term loans||9.||10.||Income from other securities and long-term loans|
|11.||12.||other interest and similar income||10.||11.||other interest and similar income|
|13.||(UGB: Income from the disposal of and the write-up of financial assets and marketable securities)||12.||(UGB: Income from the disposal of and the write-up of financial assets and marketable securities)|
|12.||14th||Depreciation on financial assets and customary depreciation on securities held as current assets (UGB: expenses from financial assets and from securities classified as current assets)||11.||13.||Depreciation on financial assets and on securities held as current assets (UGB: expenses from financial assets and on securities held as current assets)|
|13.||15th||Interest and similar expenses||12.||14th||Interest and similar expenses|
|=||16.||Financial result||=||15th||Financial result|
|=||17th||Result from ordinary business activities (operating and financial result) (UGB: earnings before taxes)||=||16.||Result from ordinary business activities (operating and financial result) (UGB: earnings before taxes)|
|14th||18th||Taxes on income and earnings||13.||17th||Taxes on income and earnings|
|15th||19th||Result after taxes||14th||18th||Result after taxes|
|16.||20th||other taxes (all other taxes recognized in profit or loss)||15th||19th||other taxes (all other taxes recognized in profit or loss)|
|17th||21st||Annual surplus / annual deficit (last item in the income statement according to HGB)||16.||20th||Annual surplus / annual deficit (last item in the income statement according to HGB)|
|(Germany and Austria :) Supplementary information for stock corporations or continuation of the income statement in accordance with Section 231 of the UGB, unless it is shown in the notes in accordance with Section 231 (5) of the UGB|
|22nd||Withdrawals from the capital reserve (UGB: release of capital reserves)||21st||Withdrawals from the capital reserve (UGB: release of capital reserves)|
|23.||Withdrawals from revenue reserves (UGB: release of revenue reserves)||22nd||Withdrawals from revenue reserves (UGB: release of revenue reserves)|
|24.||Allocation to revenue reserves (UGB: allocation to revenue reserves)||23.||Allocation to revenue reserves (UGB: allocation to revenue reserves)|
|25th||Profit carryforward / loss carryforward from the previous year||24.||Profit carryforward / loss carryforward from the previous year|
|26th||Balance sheet profit / balance sheet loss||25th||Balance sheet profit / balance sheet loss|
According to IFRS and US-GAAP
In comparison with the HGB regulations, international accounting in accordance with IFRS makes lower demands on the formal structure of the income statement. If it is drawn up using the cost of sales method, additional information on personnel expenses and scheduled depreciation is required in the notes. Furthermore, not only the regular, but all significant income and expenses must be shown in the income statement or the notes; In particular, important irregular components of the result (for example unscheduled depreciation on inventories) must be shown separately.
In the US standards , the income statement is the most important reporting tool; however, just like the IFRS, US-GAAP knows only a few regulations for the formal structure of the income statement. The numerous information to be published can usually be listed alternatively in the income statement (“income statement” or “profit and loss” (P&L)), supplementary tables (“schedules”) or in the appendix (“notes”). The minimum information essentially corresponds to the IFRS classification; the most important difference is the mandatory disclosure of an extraordinary result.
|Minimum breakdown of the income statement according to IFRS|
|Total cost method||Expense of sales method|
|Post (German)||Post||Post (German)||Post|
|Other company income||Other operating income||Cost of the implemented service||Cost of Goods Sold, Cost of Product, Cost of Service|
|Inventory changes||Changes in inventories of finished goods and work in progress||Gross profit on sales||Big profit|
|Cost of materials||Raw materials and consumables used||Other company income||Other operating income|
|Personnel expenses||Employee benefits costs||Distribution costs||Cost of sales, distribution costs|
|Depreciation||Depreciation and amortization expense||Other administrative costs||Administrative expenses|
|Other operating expenses||Other operating expenses||Other operating expenses||Other operating expenses|
|Financial expenses excluding equity companies||Finance costs||Financial expenses excluding equity companies||Finance costs|
|Finance income excluding equity companies||Finance revenues||Finance income excluding equity companies||Finance revenues|
|Contributions to earnings from investments accounted for using the equity method||Income from associates and joint ventures accounted for using the equity method||Contributions to earnings from investments accounted for using the equity method||Income from associates and joint ventures accounted for using the equity method|
|Profit before tax||Profit or loss before tax||Profit before tax||Profit or loss before tax|
|Income taxes||Tax expenses||Income taxes||Tax expenses|
|Result from continuing operations||Net profit or loss for the period from continuing operations||Result from continuing operations||Net profit or loss for the period from continuing operations|
|Result from the abandonment of business areas||Profit or loss of discontinued operations||Result from the abandonment of business areas||Profit or loss of discontinued operations|
|Result of the period||Net profit or loss for the period||Result of the period||Net profit or loss for the period|
|Profit share of the minority shareholders||Profit or loss attributable to minority interest||Profit share of the minority shareholders||Profit or loss attributable to minority interest|
|Equity provider share of profit||Profit or loss attributable to equity holders of the parent||Equity provider share of profit||Profit or loss attributable to equity holders of the parent|
|Earnings per share||Earnings per share||Earnings per share||Earnings per share|
Public administration in Germany
In the Kameralistik a profit and loss account was unknown. Only since the introduction of accrual accounting by the new municipal financial management applicable since 2003 trade regulations for municipalities , municipal enterprises or public utility companies . In the public administration is called the profit and loss account and income .
Procedure for the annual financial statements
At the end of the year, the balances of each expense and income account are transferred to the income statement. If the accounting is correct, the total result of these transfers , the balance of the P&L account, must result in the same amount as in the calculation scheme shown above ( verification ). The P&L account is then closed via the equity balance sheet account . In the event of a profit, equity is increased, in the event of a loss, it is reduced. The result of the income statement is thus transferred to the balance sheet . The profit and loss account and its parent equity account connect the two accounts circuits of double entry ( L accounts and stock accounts ).
Since, as a rule, all income and expenses have to be recorded in the income statement, a comparison of the equity of two financial years shows the same company success as the result of the income statement. Changes in equity that are not reflected in the income statement are contributions and withdrawals by the owners. These operations are not income or expenses because they did not arise in the company's business process. In addition, there HGB only a few exceptions, the P & L neutral can be posted directly to equity: These include foreign exchange differences and the offsetting of goodwill with the reserves . IFRS and US-GAAP allow greater options, especially in connection with the valuation of fixed assets . It is the task of the statement of changes in equity to show components of the result that are not apparent from the income statement .
- Adolf G. Coenenberg , Axel Haller, Wolfgang Schultze : Annual accounts and analysis of the annual accounts. Business, commercial, tax and international principles. HGB, IFRS, US-GAAP. 21st, revised edition, legal status and status of the standards June 1, 2009. Schäffer-Poeschel, Stuttgart 2009, ISBN 978-3-7910-2770-8 .
- Johannes Ditges, Uwe Arendt: Balance sheets. 13th, revised and updated edition. Friedrich Kiel, Herne 2010, ISBN 978-3-470-53684-2 .
- Manfred Deitermann, Siegfried Schmolke, Wolf-Dieter Rückwart: Industrial accounting. Financial accounting - analysis and criticism of the annual financial statements - cost and performance accounting. Introduction and practice. 38th, revised edition. Winkler, Darmstadt 2010, ISBN 978-3-8045-6652-1 .
- Rules of the International Financial Reporting Standards (IFRS) for the formal layout of the income statement (IAS I, 78 and following) - German version (PDF; 1.51 MB)
- Duden spelling; both "old" (20th edition 1990) and "new" (22nd edition 2001)
- Volker H. Peemöller: balance sheet analysis and accounting policy. Introduction to the basics. 3rd, updated edition. Gabler, Wiesbaden 2003, ISBN 3-409-33534-X , p. 378.