A Comparative Statement of Profit and Loss lists Revenue from Operations, Other Income, Total Revenue, each expense head, Profit/(Loss) before Tax, Tax and Profit/(Loss) after Tax side by side for both years, with the absolute and percentage change. Figures in brackets are negative.

Classification of the given items

• Revenue from Operations = Cost of Revenue from Operations + Gross Profit.
• Cost of Revenue from Operations = Cash purchases + Credit purchases + Manufacturing expenses, adjusted for stock (a decrease in stock is added, an increase is subtracted).
• Other Income = Profit on sale of furniture.
• Freight Outward and Carriage Outward are BOTH selling & distribution expenses and must both be included.
• Remaining heads: Employee Benefit (office wages), Depreciation, Finance Costs (interest on short-term loans + interest on 10% debentures) and Other Expenses (Loss on sale of office car — an office car is a business asset, so this loss is a genuine business expense). Machinery is a Balance-Sheet item and is excluded.

Revenue from Operations

• 2015-16: Cost = (80,000 + 60,000) + 50,000 + stock decrease 60,000 = ₹2,50,000; Revenue = 2,50,000 + Gross Profit (—30,000) = ₹2,20,000.
• 2016-17: Cost = (60,000 + 20,000) + 20,000 — stock increase 30,000 = ₹70,000; Revenue = 70,000 + Gross Profit 90,000 = ₹1,60,000.

Comparative Statement of Profit and Loss

Classification of items

A Comparative Statement of Profit & Loss lists Revenue from Operations, Other Income, Total Revenue, Expenses, Profit before Tax, Tax and Profit after Tax side by side for both years, with the absolute and percentage change.

• Revenue from Operations = Cost of Revenue from Operations + Gross Profit.
• Cost of Revenue from Operations = Cash purchases + Credit purchases + Manufacturing expenses +/- Stock adjustment (a decrease in stock is added, an increase is subtracted).
• Other Income = Profit on sale of furniture.
• Remaining expense heads: Employee Benefit (Wages - office), Selling & Distribution (Freight outward + Carriage outward), Depreciation, Finance Costs (Interest on short-term loans + Interest on 10% debentures) and Other Expenses (Loss on sale of office car).
• Machinery (₹3,00,000; ₹2,00,000) is a Balance-Sheet item, not a Profit & Loss item, so it is excluded. Figures shown in brackets are negative.

Working - Cost of Revenue from Operations and Revenue from Operations

2015-16: Purchases (80,000 + 60,000) + Manufacturing 50,000 + Stock decrease 60,000 = ₹2,50,000; Revenue = 2,50,000 + Gross Profit (-30,000) = ₹2,20,000.

2016-17: Purchases (60,000 + 20,000) + Manufacturing 20,000 - Stock increase 30,000 = ₹70,000; Revenue = 70,000 + Gross Profit 90,000 = ₹1,60,000.

(Return inward is already reflected in net Revenue from Operations. "10% debentures" is read as the interest on debentures using the amount stated against it, consistent with the other expense lines.)

Comparative Statement of Profit & Loss