Your first P&L
Lesson 3 of 13 in our free Business Money Basics guide: a 5-minute money game with the key points below.
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Questions you'll answer
Illustration. Mo's month: sales £4,000. Ingredients £1,200 and packaging £200. Kitchen rent £800, stall fees £300, marketing £150, insurance £50. What's the net profit?
Which line on a P&L tells you if each sale makes money before the running costs?
Quick facts
- Cake sales to customers → Revenue. The top line: money from selling.
- Flour, sugar and butter → Cost of sales. Direct costs of making what you sold.
- Cake boxes → Cost of sales. Packaging for each sale is a direct cost.
- Shared kitchen rent → Overheads. A running cost of the business, not tied to each cake.
- Business insurance → Overheads. An overhead: you pay it to stay open.
- Fees for a party catering job → Revenue. Any income from selling goods or services is revenue.