Deck 4: The Profit and Loss Statement P - L

Question 1

Match the line account or classification to the appropriate P L.

Answer 1

Note:
1. The consolidated P L is a summary P L that is arranged by revenue center, profit center, expense center and fixed costs.
2. Departmental profit measures the profitability of all the operating departments.

Question 2

Define and name the four main classifications of accounting information in a Consolidated P L.

Answer 2

The consolidated P L is used to report and measure financial performance.
The classification of accounting information in a consolidated P L is:
1. Revenue centers
2. Profit centers
3. Expense centers
4. Fixed cost

Question 3

Draw the format for a Consolidated P L using the three sections in review question.
Question
Name the three sections of the format for a P L.

Answer 3

Format of consolidated P L:
The three sections of the format for a P L a/c:
1. Title- it identifies the report, time period and company name.
2. Horizontal heading-it includes the current month or period financial information organized into actual, budget and last year and the year to date financial information also organized into actual, budget and last year.
3. Vertical headings-it identifies the department's revenue, expenses and profit accounts and is organized with revenues at the top, expenses in the middle and profits at the bottom.

Question 4

Define and name the five main revenue and expense categories in a Department P L.

Question 5

Draw the format for a Department P L using the three sections in review question.
Question
Name the three sections of the format for a P L.

Question 6

Name and describe four different profit levels in a Consolidated P L. What do they measure?

Question 7

Name the three sections of the format for a P L.

Question 8

Explain the differences between a Profit Center and Expense Center. Give examples.

Question 9

What is cl line account and why IS it important in financial analysis?

Question 10

Refer to the Hotel Organization Chart in Chapter 3. Identify at least one hotel department that each Executive Committee Member is responsible for.

Question 11

Why do you think this is the most important chapter of this book?