The Revenue Statement

Revenue statement – presents a summary of the businesses revenues and expenses for a specific period, for example, monthly or quarterly.

The revenue statement can be an excellent guide to compare the amount of sales to the actual costs of goods sold (COGS). This could identify wether the stock purchased was either too expensive or brought in too great a quantity. The difference between gross profit and COGS will also indicate the mark up on goods.

The lower section of the profit and loss statement identifies all expense involved in the business and classifies each cost individually. This enables managers to adopt a strategy of cost reduction for individual items, which are considered excessive.

Revenues will include incomes, income from investments, fees, rent and interest earned.

Expenses will include advertising, financial and administrative expense. (NO COGS!)

Revenue Statement for Swiss Watchmakers for the year ending 30 June 2010
Sales
Less COGS
Opening stock
(plus) purchases
(subtract) closing stock / $000’s
100
100
50 / $000’s
200
150 / $000’s
1000
Gross Profit / 850
Expenses
Advertising
Wages
Telephone
Electricity
Rent
Interest
Bad debts
Discount allowed / 10
40
10
10
50
10
10
10
Total expenses / 150 / -150
Net Profit / 650

Task1: Revenue or Expense

Classify the following as either a revenue or and expense

a)Discount allowed
b)Accountant
c)Telephone
d)Sales
e)Discount received

Task 2: COGS

Calculate the COGS for the following: Swiss Watchmakers commence their trading period with $ 2,000 worth of watches. They purchased stock worth $ 40,000 during this time. At the close of the trading period a stock take was conducted and found that there was $10,000 worth of stock. Calculate COGS:

$
Opening stock e.g.
Add / Purchases (include customs)
Less / Closing stock
COGS

Task3: Creating a Revenue Statement

Complete a Revenue statement for B Hanson Pty Ltd for a period ending 30 April 2009, and in doing so calculate the Gross and Net Profit

Opening Stock
Sales
Rent
Advertising
Insurance
Cartage or freight Outwards
Purchases
Closing Stock
Bad Debts
Wages / $
50,000
200,000
20,000
25,000
8,000
10,000
60,000
10,000
2,000
30,000
Revenue Statement for B Hanson Pty Ltd for the year ending 30 June 2009
Sales
Less COGS
Opening stock
(plus) purchases
(subtract) closing stock / $ / $ / $
Gross Profit
Expenses
Advertising
Wages
Telephone
Electricity
Rent
Interest
Bad debts
Discount allowed
Total expenses
Net Profit

a)The Gross Profit for B Hanson Pty Ltd is

b)The Net Profit for B Hanson Pty Ltd is

  1. B Hanson gave you the figures for the next year, for the Year Ended 30 April 2010. These figures were

Opening Stock
Sales of stock
Rent
Advertising
Cartage Outwards
Purchases
Closing stock
Bad debts
Wages / $
10,000
300,000
15,000
50,000
12,000
90,000
5,000
10,000
60,000
Revenue Statement for B Hanson Pty Ltd for the year ending 30 June 2010
Sales
Less COGS
Opening stock
(plus) purchases
(subtract) closing stock / $ / $ / $
Gross Profit
Expenses
Advertising
Wages
Telephone
Electricity
Rent
Interest
Bad debts
Discount allowed
Total expenses
Net Profit

Calculate for the Year Ended 30/04/10:

a)Gross Profit

b)Net profit

c)Compared the profitability of B Hanson between 2009 and 2010

d)What factors were responsible for this change?

e)Despite the success of the business can you offer B Hanson any advice?