Movie Case Study
The scene that you just saw is from the movie Rocket Singh. In the movie Rocket, Singh’s character is played by Ranbir Kapoor. He finds himself in a job where he is continuously humiliated by his seniors and boss for doing the ethically right thing.
After a lot of frustration and anger, he decides to form his own company ‘Rocket Sales Corporation’ while continuing to work in his current company. The scene depicts how Harpreet Singh is recording all expenses related to paper, printer cartridges, electricity, phone calls, ink, etc. This is mainly because every company makes a profit or loss account or an income statement. Learning Perspectives will explore the meaning of profit and loss account in this blog.
Profit and Loss Account
As the name suggests income statement helps in finding out the profit or loss of the company during a particular period. The top line of the income statement/Profit & loss account indicates the revenue or sales of the company, below this all expenses that the company incurs are recorded.
If sales/ revenue is more than the expenses then profit is recorded by the company but if expenses are more than the sales/revenue, then the loss is reported.
Format of Income Statement
Here Rs. 50,000 of Sales/ revenue is reported while expenses are reported for Rs. 11,499. Hence giving a profit of Rs. 38,501.
Resources of the company that Harpreet Singh would be using such as ink, paper, etc., he says that he would return to the owner along with interest.
Important Facts about Income Statement
Understand Income Statement with a Video