Management Accounting: Profit
How much the company earned this month, not how much is in the bank
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Why you need it
There’s money in the account but no profit: a three-month prepayment is sitting in the balance, and a big contractor invoice hasn’t arrived yet. The owner looks at the bank statement, thinks all is well, and hears the truth from the accountant a quarter later.
Income and expenses are allocated to categories and accrual months, separately from cash movements, and add up to a profit and loss report by business line. Next to it is a simple management balance sheet: what we’re owed, what we owe, and what’s tied up in stock.
What’s inside
- Income and expense categories
- Business lines and profit centers
- Accruals and allocation of indirect costs
- Income and expense register
- P&L, margin, break-even point