I am learning the course named Financial Reporting With Power BI. There are 2 questions really puzzled me.
It is about accounting concept, not quite relating with Power BI. To get the gross profit, the formula is Revenue - COGS. In the course, we didn’t consider about Unit Cost * Order Quantity although we took revenue from Unit Price * Order Quantity. Only taking COGS from company expenses data for Total COGS.
In the Income Statement Template, I find it difficult to understand myself why we need to use Income Statement Items (normalized).
Thank you so much, Sir. I am struggling for these questions and asking myself why but I can’t figure out.
Part 1: If you observe the Excel Data, you’ll see that in the “Sales” fact table the key information is related to Revenues and specifically if use the term it’s reserved for recording the “Operating Revenues” figures so that table is exclusively reserved for extracting the Revenues figures into your template.
Part 2: As you asked about why the “Cost” figures from the “Sales” fact table are not included in the COGS. Now for this, it is to be noted here that “COGS” itself doesn’t comprise of "Cost of Products i.e. Unit Cost * Sales Quantity" only it is just a part of COGS. There are several other factor which are and forms an integral part of “COGS” and therefore he has considered the “Expenses” table where it involves all the company related expenses including “COS - Materials”. So if I use the technical term here, then Expenses table includes/records all the company’s “Operating” as well as “Non - Operating” expenses. I’m providing an image below where “COGS” includes materials or cost of products as well in it’s COGS.
Now, the only point to be noted over here is that you might wonder why the Cost of Products from the Sales table doesn’t match with the COS - Materials from the Expenses table. The answer it’s a dummy data and numbers will by default tend to defer.
It’s been presumed that company maintains two different records or there are two different systems for recording the “Sales/Operating Revenue Figure” as well as "Operating and Non - Operating Expenses". If the company had “Non - Operating Revenues” i.e. Sale proceeds from Investment, Subscription payment received from Customers, Sale proceeds from scrap, Miscellaneous Incomes, etc. then there would have been third table as well because these types of Revenues would not have been able to be recorded in the “Sales” fact table since it covers only the “Operating Revenues” part.
Answer for 2nd Question:
The main reason behind to use 2 different columns with the same naming conventions is that “Normalized” columns acts a “Lookup Identifier” in your template and once it recognizes the figures against that particular item it feeds the data into you “Template”. I’m providing a link of one of his workshop video where he has explained why two columns are required in your template although the naming conventions tend to be the same.
Hoping you find this useful and helps you to solve the query that you have.
