Accounting For Dummies®, 4th Edition

9.4. Looking More Closely at the Profit Center P&L Report

As the previous sections should make clear, profit center managers depend heavily on the information in their P&L reports. They need to thoroughly understand these profit reports. Therefore, I want to spend some time walking through each element of the P&L report. Please flip back to Figure 9-1 as I do so.

9.4.1. Sales volume

Sales volume, the first line in the P&L report, is the total number of units sold during the period, net of any returns by customers. Sales volume should include only units that actually brought in revenue to the business. In general, businesses do a good job in keeping track of the sales volumes of their products (and services). These are closely monitored figures in, for example, the automobile and personal computer industries.

Now here's a nagging problem: Some businesses sell a huge variety of products. No single product or product line brings in more than a small fraction of the total sales revenue. For instance, McGuckin Hardware, a general hardware store in Boulder, carries more than 100,000 products. The business may keep count of customer traffic or the number of individual sales made over the year, but it probably does not track the quantities sold for each and every product it sells. I explore this issue later in the chapter — see the last section, "Closing with a Boozy Example," for more details.

9.4.2. Sales revenue

Sales revenue is the net amount of money received by the business from ...