revenue – expenses = Profit
- Revenue: The money a business earns from the sale of goods or services. This section includes all projected revenue from sales, subscriptions, and other sources.
- Expenses (COGS): This section includes all projected costs associated with running the business, such as inventory, shipping, marketing, and technology expenses. The cost of shipping to the customer is not included in COGS. Expenses that are directly linked to the production of the product and will vary based on your number of unit.
- Gross profit: The difference between revenue and cost of goods sold. It represents the amount of money that is left over after accounting for the costs of producing the goods or services you sell. This section calculates the difference between income and expenses and represents the amount of money available to cover other expenses and generate a profit.
- Operating expenses: The costs that are incurred while running the business, such as rent, salaries, and utilities. This section includes all expenses that are necessary to keep the business running, such as rent, utilities, insurance, and salaries.
- Net profit: This section calculates the final profit by subtracting all expenses (including overhead expenses) from the gross profit.
General ledger : Categories of expenses that generally has a number associated to it.