Does net profit include inventory purchases?

[KJ23]

My current P&L statement looks kind of like this:

Revenue:
-revenue categories
Total Revenue: $

Cost of Goods Sold
-Cost of Goods Sold $
Total Cost of Goods Sold: $

Gross Profit: $[Total Revenue-Total COGS]

Expenses
-expenses categories
Total Expenses: $

Net Profit: $[Gross Profit-Expenses]

That's how most P&L statements I've looked at are laid out. However, nowhere on my current P&L are the inventory purchases shown. Should they be on there somewhere? Should inventory purchases be subtracted from the Net Profit? (remember that inventory can't be considered an expense until sold, though..).

 

[kirby]

You are looking at a P&L statement. Inventory purchases are not shown there. Those inventory purchases balances will be a component of the BALANCE SHEET line item "Inventory."

 

[KJ23]

OK, thanks. I hadn't seen inventory purchases on any of the example P&L statements I looked at, but it seemed like it should be on there to give a complete picture of things.

 

[j.harris]

Kirkby is right, let us know if you need any more advice on this.

 

[LYAK]

Inventory purchases are added to the line item "inventory" on the balance sheet, a current asset. Only when the inventory is sold is it included on the income statement, as cost of goods sold and removed from the balance sheet. Up until the sale, the inventory represents a probable economic benefit to the company; when sold, the inventory generates revenue, and the expense is incurred.

 

[MAK]

Opening Inventory+Purchases-Closing Stock=Cost of Sales
If you have calculated cost of sales then it means you have already considered your purchases. The closing Inventory should be shown in BS.