I work for a consulting company, whereby we invoice our clients based on programs we run. We are now doing a Profit and loss statement, and my manager has said that I need to include fixed expenses in the revenue figure.
Can someone please explain why we are doing this - he has just said "please just do it"
Sounds Stange, and doesn't sound like a great manager, still learning to work with bad managers is a great life skill.
Its all a bit cryptic but.....
I suppose depending on the structure of your ledgers and the P&L statement you may be showing revenue or gross sales, then subtracting some fixed costs associated with the production of that revenue (which presumably for you consulting company would largly be salaries or the costs of the programs your are charging for).
Thus arriving at gross profit (sales less cost of sales)?
I thought it would be nice of me to Run Monthly, and Quarterly P&Ls for my directors for all the bars and the company as a whole..... ...... I know have So much extra work to do as many nominals have been set up wrong e.g. They want Disposable Consumables as an overhead and its under Purchases Entertainment under Sales Promotion....
My question is, i have been arguing with them over Sales. They want sales discounts to show as an overhead so that it doesn't efffect the Gross Sales (sales discounts are currently on the same nominal code as Sales, 4000)
Should i do as they say or stick to my guns, i can put it on a seperate nominal code, but i on't think it should go in overheads, it should stay in sales?
Also I am moving disposables from purchases(5120) to overheads(7410) but i have a years worth of transations to move. I have given myself 2 options which would you suggest? (using sage 50)
a. go into corrections, manually change each transactions nominal code - time consuming and leaves loads of deleted items?
b. journal the monthly nominal total from 5120 to 7410 - my first choice but will this cause a problem with invoices coded to 5120?
I would do as they ask Nicola, I don't see a problem in presenting accounts in a way that they understand, when the final accounts are prepared it may well look a bit different.
Nicola, the directors are fooling themselves (or maybe their shareholders!) but unless you believe they are doing something wrong you can only do what they ask you to do. Their P&L wont be any different, but their T/O will be inflated. Maybe they just want to feel better about their business!
Ok then I will create a new nominal from the start of the new f/y march - i have told them its too much to ask me to journal all that as well as the stuff which is wrong, they are happy with it starting in March. I just wanted to check if i was doing anything wrong by moving it, logically to me i would keep it in Sales, but like you said, they probs want to feel better about the business!
I would do a journal for the total amount being moved, so long as you note it in the description what it is for and why.
Nominal codes do not matter that much when doing a P&L, as the final accounts or monthly management accounts are not normally created by using the sage reports.
As you are an employee, I would go with the flow and do things how they want, after all the buck stops with them.
