Expenses and Profits
Under the heading “Summary” at the bottom of the sheet, provision has been made for finding out how much net profit YOU have made for the month.
On the line marked “Gross Profits” enter the “Month Total” figures in the eighth column. Below this enter all the various items of expense as follows:
(1) Advertising: By advertising is meant such copy, signs, etc., which may be prepared and used for the purpose of keeping the public informed as to your ability to serve them—in other words, any space which is used for general publicity purposes, such as for instance, your card in the classified telephone directory, or blotters, folders, dodgers which you may have printed up and distributed.
Do not load this account with church programs, contributions to the ball team, tickets to the fireman’s ball and the like. These are donations, and not advertising.
(2) Electricity: All bills for electrical current will be charged to this account.
(3) Freight: Charges for all freight and express will be made to this account.
(4) Insurance: The total yearly insurance should be divined by twelve, to obtain the amount to be charged to this account monthly.
(5) Proprietor’s salary: Many battery service station proprietors do not charge their own living as an expense. That’s a serious mistake, of course. If those same men should hire a manager to run their service station, the manager’s salary would naturally be charged to expense. The amount of money withdrawn from the business by the proprietor should therefore be charged to expense.
(6) Rent: The amount of money you pay monthly for rent should be charged to this account. If, on the other hand, you own your own building, charge the business with rent, the same as if you were paying it to someone else. Every business should stand rent; besides, the building itself should show itself a profitable investment. Charge yourself just as much as you would anyone else; don’t favor your business by undercharging, nor handicap it by overcharging.
(7) Supplies: The cost of all supplies, small tools and miscellaneous articles which are bought for use in the business and not for sale should be charged to this account.
(8) Taxes: The yearly amount of taxes paid should be divided by twelve, in order to arrive at the monthly proportion to be charged to this account.
(9) Wages: The amount of wages paid to employees should be charged to this account. Care should be taken to determine the actual amount for the month, if wages are paid on a daily or weekly wage rate.
(10) Miscellaneous: Any expenses of the business not listed above will be charged to this account. This may include such items as donations, loss on bad accounts, and such like items of expense. You may itemize these into as many headings as you desire, but for the purposes of the Daily Exhibit combine all of them under “Miscellaneous Expense.”
All these expense items are then added together, and this total is entered on the line marked “Total Expenses.”
Deduct “Total Expenses” from “Gross Profit” to arrive at “Net Profit.”
To arrive at the totals for “This Year to Date,” carry the figures forward from the previous month’s sheet and add figures for present month.
The figures for “Last Year to Date” will be found on the sheet for the corresponding month of last year, and are copied in this column.
All percentages should be figured on sales. The figures shown on each line in the “Amount” columns under the headings “This Month,” “This Year to Date” and “Last Year to Date” should be divided by the “Month Total” of the sixth column, shown above, i. e., “Goods Sold, Less Goods Returned.”
When you take inventory, the amount of stock should equal “Merchandise on Hand,” as shown by the Daily Exhibit. But there will generally be a discrepancy, varying with the size of your stock, and that discrepancy will represent the amount of goods gone out of your station without being paid for; sold for cash and not accounted for; sold on credit and not charged, and the like. It’s worth something to know exactly what this amounts to. The place for this information is under “Inventory Variations” on the sheet.
The space headed “Accounts Payable” is provided for recording, on the last day of every month, just what you owe for accounts and for notes, and also the same information for the corresponding date of last year.