Profit and loss statement

“ With such, and so many additional charges, how can there be any profit, if the goods are sold customers at a fair price that will attract them?
There is only one way to cover possible loss and that is in getting rid of the goods at a small profit. ”

“ Measured in money, and considering the tremendous waste, how few gain and how many lose ! Measured by any other standard than filthy lucre, among the people I know, there are none who profit : all are losers. ”

“ To inquire searchingly into every nook and cranny of the business, to construct, as it were, for each part a separate balance-sheet of profit and loss, to expand in those directions where further development promises good results, and to curtail activity where loss is already evident, is the very essence of good management. Here, it will be observed, we are using language very similar to that in which we described the principles which govern a business man's expenditure. ”

“ When such profit is evidently not to be had, if people do not actually withdraw their capital, they at least abstain from replacing it when consumed. The cost of production, together with the ordinary profit, may therefore be called the necessary price, or value, of all things made by labour and capital. Nobody willingly produces in the prospect of loss. ”

“ Treatment of Good-Will upon Liquidation by Sale.—When dissolution is brought about by the sale of the entire business, it may happen that the amount realized on the assets is smaller than their book value, and the difference must be treated as a loss in accordance with the principles previously stated. Similarly, where the assets are sold and the price realized is larger than their book value, the excess constitutes a profit and must be distributed among the partners in profit and loss ratio. ”

“ But tell me, gentlemen, if you regard the books of merchants as holding good in practice? It appears to me that if there is anything in the world which should have practical authority, when the question regards profit and loss, it is commercial accounts. ”

“ If the profit is to be divided in case of profit, the loss ought to be divided in case of loss. It is sufficient to make the enterprise a joint one, if the profit is to be divided in case of profit. And if it be a joint enter­prise, it is as much right that the risk of loss should be [*31] jointly borne, as that the chance of profit should be jointly enjoyed. ”

“ Every effort is offset by the cost of that endeavor, and unless the result of the effort be more than its cost, its aim, viz., the increase of net worth, is not accomplished.
Relation between Profit and Loss and Financial Elements.—These income-producing efforts are the agencies that bring about the changes in the values of assets and liabilities. Expenses and costs are incurred for the purpose of securing income. Every expense or cost that is settled causes a diminution of business assets, usually of the asset cash. ”

“ They constitute rather the ledger of the people, in which, as the merchant in his books, the citizen can read at once all the results of a week, a month, a year, or series of years, and can deduce the profit or the loss which has accrued to the account of vitality, morals, education, wealth, power. ”

“ The distribution of provisions, money, and merchandise in just proportions, according to times and places, is the true secret of finance and the source of wealth, provided those who administer it have foresight enough to suffer a present apparent loss, in order really to obtain immense profits in the future. ”

“ We have lost money right along on our live stock—not a great deal, but a small amount. So when your informer tells you that they purchase goods from the company at a fair profit to the company, the statement is not correct, for we sell no goods to them at all except what goes with the land. ”

“ Conservatism is necessary in pricing an inventory, for the taking of credit for unearned profits is wrong in principle.
This inventory shows the cost of goods in stock to be $1,042.77.
12. Closing the Books. This is the process of balancing all revenue accounts, and transferring the balances to the profit and loss account, the balance of the account being finally transferred or closed into the capital, surplus, or deficiency account, as the case may be. We have learned that in a single proprietorship, profit and loss is finally closed into capital or investment account. ”

“ Content of Profit and Loss Summary.—The content of the profit and loss summary is determined by the need of information for purposes of management. A profit and loss summary which is sufficient for a small business, where the proprietor is in intimate contact with all phases of the business, would not give sufficient information for the proper control of a large business, where the managing executives are dependent for their information as to the various phases of business activity on reports made to them. ”

“ The choice of goods to be taken from each person, the chance of accident before the day of sale, the naming of citizens who were to bear the charges of making good any possible loss, the various fortunes of the auction and of the prices it might bring, the skilful calculations necessary to ensure that however much the profits might exceed the needed sum they should never fall short of it—all these things created at every turn new chances of corruption, new hopes of profit to those in authority, and new prospects of ruin to those under the law. ”

“ What is called 'gross profit' comprehends frequently, not only this surplus, but what is retained for compensating such extraordinary losses. * * * The chance of loss is frequently undervalued and scarce ever valued more that it is worth. * * * In all the different employments of stock, the ordinary rate of profit varies more or less with the certainty or uncertainty of the returns. * * * The ordinary rate of profit always rises more or less with the risk. ”

“ It is clear that in ascertaining the present value we are not limited to the consideration of the amount of the actual investment. If that has been reckless or improvident, losses may be sustained which the community does not underwrite. ”

“ The immediate practical point is that, in the process of adjustment, someone will have to take a loss. And who can take a loss except those who have something which they can afford to lose? But the expression, "take a loss," is rather misleading. Really no loss is taken at all. It is only a giving up of a certain part of the past profits in order to gain more in the future. ”

“ Profit, another form of interest, is an expensive process of your money system. The Romans had a saying, Caveat Emptor, 'Let the buyer beware.' History shows that your industrial, and commercial business, and services have always been based on hard bargaining. The desire for more money gain was and is so deeply impregnated in you that it has blunted and broken down your ethical standards. You have always tried to get the most gain for the least value. ”

“ I, says debt stock, encourage industry, by taking way your money; and I, says bank stock, by pouring money into your pockets. When, by theory or experience, has it ever been said, that either the redundancy of money, or the loss of earnings, was an encouragement to industry? If the calculation of a false opinion, that industry enjoys her own earnings, is the best mode to which all orders, titled or stock, can resort for her encouragement, it is evident that the mode would be improved, by making the opinion true. Fulfilment would be a stronger excitement to industry, than disappointed hope. ”

“ If the farmer's profits must come from the consumers of sugar as a bounty or tax, and not from the inherent profitableness of the business, then the farmer's profits are the consumer's loss. The business is inherently unprofitable, and no farmer, or any one else, has a right, 'inherent' or otherwise, to carry on an unprofitable business, except at his own expense.... ”

“ Why should there be any profits at all, I should like to know. And if profits there must be, well then, the profit grabber isn’t going to get ten times as much as the wage-earner, just because he had a few screwing forefathers. ”

“ But if he embarks in business on his own account, he always exposes his capital to some, and in many cases to very great, danger of partial or total loss. For this danger he must be compensated, otherwise he will not incur it. ”

“ If we are approaching such a limitation, it is the more important that the public should be educated to the fact—not theory, for it is a fact—that going value, or going concern value, is a real element of cost, covering an outlay in effort and money on the part of the corporation, and as such is as much entitled to earn a return (interest and profit) as is the other capital invested in plant. ”

“ The whole impression of this picture is one of industry, prosperity, thrift, and—by reason of these three—happiness.
The nature of profits. Profits.—The return received by the organizers and managers of productive enterprises is commonly known as profit. The amount of their profit depends upon the degree of success with which they can produce goods for less than the selling price. Every employer or organizer assumes a considerable amount of risk. He obligates himself to pay definite amounts for the use of capital, materials, and labor no matter what the value of the finished products. ”

“ Because business must figure in these losses as part of the cost of doing business, the price of their products or services must increase accordingly to all the people who avail themselves of these goods or services. ”

“ If it is strong and increasing, he will feel sure that the consumers will repay the whole cost of production, interest and capital included, and in addition the legitimate profit attached to the business. ”

“ There is nothing like "dreadful failure" for insuring complete success, and selling off at the most "frightful loss" is the cleverest way of getting the very handsomest profits. As for a shopkeeper writing up over his door "established these hundred years," it's sheer madness. ”

“ From the gross profit has first to be deducted as much as will form a fund sufficient on the average to cover all losses incident to the employment. Next, it must afford such an equivalent to the owner of the capital for forbearing to consume it as is then and there a sufficient motive to him to persist in his abstinence. ”

“ Returning to the question of interest on actual capital,—i.e., the excess of value produced over the cost of production,—the question as to what determines the value of a product leads to the assertion that capital-profit must be due to an advantage which the producer possesses over the marginal producer. ”

“ A man is facing business ruin who takes and consumes as profits from his plant what should be set aside for its upkeep and replacement. The same may be said of the payment to provide against risk, which may be called insurance. The amount of money which a careful business man sets aside from the unusual gains of prosperous years to secure himself against disaster from losses in lean years is not profit. ”

“ If it is desired to recoup the loss in order not to show an impairment of capital, the loss must be charged in its entirety or piecemeal against profits. If there are no accumulated profits against which it can be charged in its entirety, it must be charged piecemeal against current profits. ”

“ Any one who was foolish enough to regard the high profits of the boom period as permanent profits got into financial trouble when the drop came. However, there is a belief, and a very strong one, that business consists of a series of profits and losses, and good business is one in which the profits exceed the losses. ”

“ The head of the factory or the mercantile establishment admits that some increase is called for. “But,” says he, “you are not the only person in trouble. The value of our money is fluctuating. We hardly know what it is to-day. We surely do not know what it will be next week. Profits are excessively close anyhow. We make a sale or a purchase to-day and think it is at a profit. ”

“ Those that much covet are with gain so fond,
For what they have not, that which they possess
They scatter and unloose it from their bond,
And so, by hoping more, they have but less;
Or, gaining more, the profit of excess
Is but to surfeit, and such griefs sustain,
That they prove bankrupt in this poor-rich gain. ”

“ That is why putting the usual type of banker or lawyer into the management of a business is courting disaster. Reducing prices increases the volume and disposes of finance, provided one regards the inevitable profit as a trust fund with which to conduct more and better business. Our profit, because of the rapidity of the turnover in the business and the great volume of sales, has, no matter what the price at which the product was sold, always been large. We have had a small profit per article but a large aggregate profit. The profit is not constant. ”

“ He has the expectation of making money, of making more than he could by lending his money. Perhaps he will be disappointed, for a common experience is the loss of capital thus invested. He hires workmen at certain wages. ”

“ Thus lay our business, crippled and moaning at our feet. Liabilities like hungry giants were devouring our trembling little assets, while dividends, like wicked fairies, were turning into assessments. ”

“ Of course the small number of successful merchants have to calculate upon the failures which will inevitably occur. They must discount the losses they are sure to incur through those failures—provide for them by increasing the otherwise sufficient profit of each transaction. In this way the public pays the cost of each failure. In other words, the consumer is taxed to pay the expense of ninety complete failures, and seven partial failures, in every hundred mercantile experiments. This expense aggregates scores of millions of dollars in this country alone, every year. ”

“ For what men say is that, if I am really just and am not also thought just profit there is none, but the pain and loss on the other hand are unmistakeable. ”