Each organization carefully monitors such an indicator as a financial result. Based on his analysis, we can conclude about the effectiveness of the organization. The determination of the financial result is carried out according to a certain technique. The procedure for recording income and profits, accounting entries will be considered later.
Definition
The determination of the financial result of the organization’s activities takes place according to a certain methodology. This allows you to identify the performance indicator of the enterprise in the reporting period. The level of increase or decrease in profit over a certain period of time is estimated.
The basis for the calculations is the amount of sales of goods or services that the organization provides. The final result also depends on the volume of the organization’s property, transactions outside the sale of basic goods and services.
Profit (loss) is calculated as the difference between the sum of realized and non-realized income. Moreover, they represent the aggregate of money received for the sale of works, goods or services at a market price. At the same time, excise taxes and VAT are not included in the cost. The cost is also taken out of the total amount. These are the costs incurred by the organization during the production and sale of its products.
In the process of determining the financial results of the enterprise, the dynamics of this indicator are determined, as well as the factors that led to such changes. This indicator is affected by three groups of reasons:
- Profit from sales.
- Non-operating income.
- Profit from the sale of a different type.
Profit from sales depends on the volume of sales and product structure, as well as on the cost and prices of finished goods. Indirectly, the above indicators are influenced by the quality of products manufactured, services rendered or work performed. The situation in the industry and the change in prices in the sales market also have an impact on the financial result. Inflation refers to factors affecting profits.
The amount of non-operating expenses is affected by the following:
- income received from equity participation;
- rental of land or fixed assets;
- penalties received or paid, fines;
- loss on writing off bad receivables;
- financial losses from natural disasters;
- income from securities (stocks, bonds) and deposits;
- loss or income from financial transactions.
Other types of profits are affected by income from sales of goods and materials, fixed assets or intangible assets.
Types of company performance
When considering the definition and accounting of financial results, it is worth paying attention to the varieties of such an indicator. It can be a profit or loss. If after deducting costs from the organization’s income, a positive number remains, then the company’s activity was effective. The organization makes a profit and is recognized break-even in the reporting period. If the costs exceeded revenues, this indicates the incorrect organization of the main activity. The company is recognized at a loss in the reporting period.
The determination of the financial result from the sale of finished products, semi-finished products, as well as profit from investment activities, is used in the analysis of the economic condition of the organization. This indicator is used in the calculation of the following ratios:
- coefficient of change in net profit;
- profitability indicators;
- analysis of transaction costs;
- asset management research;
- debt service indicators;
- liquidity;
- market indicators.
The determination of the financial result of an organization’s activity is made at regular intervals. This information is interesting to owners, managers of the company, as well as potential and real investors.
In commodity production, one of the main categories is income. He is directly involved in generating profits. From the income deduct the amount of costs spent to obtain it. The result is a profit. This process is influenced by a number of factors and complex processes, for example, the distribution policy of GDP, social causes, etc.
Profit is considered as an indicator of the value of surplus goods. Income is obtained at the time of implementation of the value set by the manufacturer. This is a summary measure. It reflects the success of the organization in a market environment. But at the same time, income is formed at the micro level. Depending on the area of receipt, there are the following varieties of profit (loss):
- gross
- from sales;
- before taxation;
- clean.
Profit Functions
Determining the financial result from the sale of finished products, property, other values allows managers and owners of the company to make adequate decisions about the direction of the organization. If the indicator decreases, a loss is determined, the reasons for such a result are established. It is also important to look for ways to increase the amount of profit. After all, it is she who becomes the main goal of any company in a market economy.
Profit performs two main functions:
- Estimated. Using relative or absolute indicators of profit, it is possible to assess whether the company worked effectively in the reporting period. Also, using similar techniques, other aspects of the organization’s activities are determined. This, for example, may be the profitability of the use of labor, material or production resources, labor productivity and so on.
- Stimulating. The profit indicator determines how satisfied the employees of the organization are with their own activities, whether they can satisfy their own social needs in the course of fulfilling the tasks assigned to them. In the presence of net retained earnings, an organization may engage in charitable activities and pay dividends to its shareholders. From profit, financing is provided for expanding the organization's activities, innovative technologies are being introduced, and production methods and technologies are being developed.
In addition, it is worth noting that the value of the company largely depends on the net profit indicator. This directly affects its well-being, competitiveness in the market. Therefore, the determination of the financial result of an enterprise is carried out at different stages of production. If negative, inhibiting development factors are identified, they are eliminated. To do this, develop comprehensive measures aimed at increasing the amount of net profit.
Calculation principle
In the process of determining and analyzing financial results, not only income and net profit are evaluated, but also their structure. This is an important work that is carried out in assessing the financial stability and profitability of the enterprise. Income is a collective indicator. It incorporates the results of work in various areas of the company (core, financial, investment).
To calculate the net profit indicator, it is necessary to determine several intermediate types of income.
So, gross profit is obtained if cost is taken from the proceeds from the sale of products. Also, excise taxes and VAT are preliminarily taken from the proceeds. The result is a profit or loss.
If commercial and managerial expenses are taken out of gross income, a profit or loss on sales is obtained. This allows you to determine at what stage the financial result was influenced by more favorable or unfavorable factors.
Further to the result obtained are added the income received from participation in other organizations, interest receivable, other income. The amount of interest payable, as well as other expenses, is subtracted from this value. The result is pre-tax profit. This is a mandatory step that you can not miss in the process of determining the financial results of the organization.
When income tax is paid out of the result, as well as permanent tax liabilities, net profit is obtained. This is the final financial result of the organization.
Further, the company distributes the net income in accordance with its needs. A reserve fund is formed from these funds, dividends are paid, and enterprise development financing is provided.
Sources of information for generating a report
In the process of determining the financial results of the company, a number of procedures are carried out in the field of accounting. This indicator is characterized by many criteria.
For example, this may be the coefficient of change of own funds, debts to creditors, debt of debtors, etc. In accounting, all the necessary information is reflected in the accounts. It provides accurate data for reporting. The information is compiled, which allows you to organize the account correctly. The main accounts are:
- 90 - “Sales”. It is used to reduce all information about income and expenses to a single indicator. As a result, the sum of the cost of the finished product and profit from its sale is provided. It provides information on equipment purchased, goods, communication services, transportation. It also includes the amount of profit from participation in the authorized capital of other companies.
- 91 - “Other expenses and profit”. This account displays data on the company's income and expenses for a certain time period.
- 94 - "Shortage, costs arising from the damage of material values." It reflects information about losses, including cash, which are associated with damage to property. These data can be identified and reflected in the account during storage, sale, manufacture of products. This does not include losses resulting from a natural disaster (recorded on account 99).
- 96 - “Reserves of future periods”. Provides data on the amount of reserved funds, including for production and sale. This, for example, may be the cost of maintenance or repair of equipment, other fixed assets, as well as the payment of premiums for long service, vacation accruals, production costs, etc.
- 97 - “deferred Costs”. This is data on expenses that occurred in the reporting period, but will be allocated to future periods. For example, this account displays the amount of costs for the preparation of production, repair of fixed assets, environmental protection measures and so on.
- 98 - "Profit of the future period." Summarizes all the amounts of profit that was received in the reporting period, but requires attribution to a future period.
The transferred accounts are used to record sales and determine the financial result. Some of them have sub accounts. This is also taken into account during reporting.
Subaccounts for report generation
In accounting, the determination of financial results is carried out by summarizing information not only on the main accounts, but also on sub-accounts. So, in the course of such work take into account the following data:
- 90/1 - “Profit”.
- 90/2 - "Cost of sales".
- 90/3 - “The amount of VAT”.
- 90/4 - “Excise”.
- 90/5 - “Export Duties”. This account is used by organizations that export products abroad. They provide for the presented cost item.
- 90/9 - "Income (loss) from the organization".
- 91/1 - “Other profit”.
- 91/2 - “Other expenses”.
- 91/9 - “Balance of expenses and income”.
The determination of the financial results of an enterprise based on information obtained through accounts has a number of nuances. The employee who is preparing the report should pay attention to them.
Some nuances of obtaining information for reporting
The definition of financial results from the implementation and other economic activities of the organization has a number of features. They are reflected in accordance with the established methodology. Bookkeeping must make the correct entries. The determination of the financial result occurs by summarizing the information received from the relevant accounts. For this, the accountant must take into account the proceeds, for which an entry is made according to Dt 62 and Kt 90/1. When using this posting, the amount of profit from sales of finished products or from the services provided is reflected.
Then another wiring is performed. It is necessary to write off the cost of production. For this, the accountant makes a posting according to Dt 90/2 and Kt 41 (45, 20, 43).
When determining other expenses and incomes, the revenues that may be associated with:
- payment for the use of the organization’s assets over time;
- provision of certain rights for appropriate remuneration;
- participation in the authorized capital of other companies;
- write-off or sale of fixed assets;
- conducting commercial operations with containers;
- other things.
In the debit 91 accounts reflect expenses that relate to payment for the provision for temporary use of the organization’s assets, loan costs, as well as for the maintenance of production facilities.
The debit 94 of the account displays a shortage that arose due to the loss or damage of material assets. At the same time, the real cost of such values is displayed. But at the same time, the depreciation amount is subtracted from the amount reflected in this account. If the values were partially corrupted, the amount of damage is also reflected in this account.
On a loan, 94 accounts take into account shortages or damage to property. It also displays the natural losses indicated in the contract. If the amount turned out to be greater than what was prescribed by the norm, then they are recorded in account 73. If there are no perpetrators, then the damage is recorded in account 91.
Income statement
There is a certain procedure for determining the financial result. The organization draws up a special document in the prescribed form. It is called a statement of financial performance. Most often, it is drawn up for one year. Some companies report for six months or a quarter. There is a certain methodology for filling out the form and determining the financial result.
In line 2110 "Sales revenue" indicates the final amount of profit from the main activities of the organization. The criteria for determining its value are the amount of income from the sale of goods, works or services. So, for example, if a company leases fixed assets, this activity is the main one, then the profit obtained in this way is reflected in the line “Revenue”. Otherwise, this amount should be displayed in the line about other income.
Line 2110 indicates the cost of sales. This includes costs that relate to profits from the core business. These are expenses incurred in the reporting period for the production of finished products.
Management costs (line 2220) include expenses for remuneration of managers. It also displays the amount of taxes, other deductions. If the company provides services without engaging in production, it is necessary to display such expenses in the line of general business expenses. Moreover, in line 2220 the amount of general business expenses may not be indicated at all.
Other company income
In the process of determining the financial result, other types of income are also reflected. So, in line 2310 of the financial statements indicate the amounts received from participation in the authorized capital of other industries. For some companies, equity is the main activity. Therefore, the amount of dividends received from ownership of securities, such organizations should display in column 2110.
Income from other investment activities is displayed in line 2320. Here, the amount of interest received by the company on its deposits, as well as debt obligations, bills, etc. is recorded. If investment activity is the main one for the company, income from it is also indicated in line 2110.
If the company has a different type of profit, which did not fall into any of the lines of the report, such an amount is displayed in line 2340. These, for example, may be penalties, fines paid by third parties in favor of the organization. It also includes income from the sale of fixed assets, spread (exchange rate difference), other income.
Other expenses
In determining the financial result, it is important to correctly relate expenses and income to items in accordance with the features of their occurrence. , , . 2330 . , , .
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