Financial sheet - Incomes negative and Expenses Positive?

[jammy-git]

I'm looking at a financial report which list out a few income columns with a total, a few expenses columns with a total and a resulting net profit. However all the incomes are negative, all the expenses are positive and the net profit is therefore always negative too. Is there a particular type of accounting system that I'm unaware of that would explain this?

[MKnight702]

In accounting postings a sales invoice is always a credit to the P&L (negative) and expenses are a debit (positive).

It does look odd but you get used to it.

[jammy-git]

Yup, that is odd. But it also explains it, so thank you!

[anonymous-user]

I qualified a long time ago (1976) but I remember the lecturer saying profit is a negative because it's money the company yous owe to the shareholder. Always thought it was a simple elegant explanation for something that looks wrong when you start to study.

[Eric Mc]

Th confusion over whether business figures should be shown as positive or negative is the reason why, hundreds of years ago, the use of "Debits" and "Credits" were substituted when explaining what type of posting a transaction merited.

Accountants and book-keepers understand Debits and Credits as, once understood, they make consistent sense. It's a bit like the preference for "Port" and "Starboard" on ships or aircraft rather than the more ambiguous terms "Left" and "Right".

[wilwak]

Balance Sheet assets are positive and liabilities are negative.

For ‘double entry’ book keeping to work then income needs to be negative and expenditure has to be positive.

Every entry in double entry book keeping must total zero.

Income naturally will increase your assets. So it’s a + to assets and a - to income using double entry.

The balance sheet will always make perfect logical sense but the P&L will appear the wrong way around! That’s accounting for you!