Example Calculation of Net Profit/Loss

Assume that Aunty Lizzy Consulting is a small consulting business operating for the month of June 2023. Here are their income and expenses for the month:

Income:

Fees from Consulting Services: GHS20,000

Expenses:

Rent: GHS3,000

Salaries: GHS8,000

Utilities: GHS1,000

Office Supplies: GHS500

Marketing Expenses: GHS1,500

Calculation:

Total Revenue (Income):

Fees from Consulting Services: GHS20,000

Total Expenses

Rent: GHS3,000

Salaries: GHS8,000

Utilities: GHS1,000

Office Supplies: GHS500

Marketing Expenses: GHS1,500

Total Expenses = GHS3,000 + GHS8,000 + GHS1,000 + GHS500 + GHS1,500 = GHS14,000

Net Profit/Loss Calculation

Net Profit/Loss = Total Revenue - Total Expenses

Net Profit/Loss = GHS20,000 (Total Revenue) - GHS14,000 (Total Expenses)

Net Profit/Loss = GHS6,000

Interpretation

Aunty Lizzy Consulting earned GHS20,000 in fees from consulting services during the month of June 2023. After deducting all expenses totalling GHS14,000 (including rent, salaries, utilities, office supplies, and marketing expenses), the company’s net profit for the month is GHS6,000. This means that Aunty Lizzy made more money from revenue than she spent on operating expenses during the period.