What is a profit and loss statement?

A profit and loss statement shows how much your business has spent and earned over a specified time. It also shows whether you’ve made a profit or a loss over that time. This shows whether your business has made a profit or loss during that time – hence the name. A profit and loss statement might also be called an ‘income statement’, a ‘statement of operations’, a ‘statement of earnings’ or a ‘P&L’.  

A profit and loss statement shows all your revenue and expenses. This includes things like payroll, advertising, rent and insurance. It will also show your earnings from sales and other forms of income.

Your total profit or loss for the time period you’ve chosen is what you’ve earned minus what you’ve spent. If this amount is positive, it’s called a net income. If it’s negative it’s called a net loss.

 

Related terms:
How to calculate gross profit
What is gross profit?
How to calculate net profit margin
What is net profit?

Related Xero feature: 
Know how your business is performing with the business dashboard

Related Small Business Guide: 
How to manage your finances and cash flow

Accounting Terms

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What is a profit and loss statement?

A profit and loss statement shows how much your business has spent and earned over a specified time. It also shows whether you’ve made a profit or a loss over that time. This shows whether your business has made a profit or loss during that time – hence the name. A profit and loss statement might also be called an ‘income statement’, a ‘statement of operations’, a ‘statement of earnings’ or a ‘P&L’.  

A profit and loss statement shows all your revenue and expenses. This includes things like payroll, advertising, rent and insurance. It will also show your earnings from sales and other forms of income.

Your total profit or loss for the time period you’ve chosen is what you’ve earned minus what you’ve spent. If this amount is positive, it’s called a net income. If it’s negative it’s called a net loss.

 

Related terms:
How to calculate gross profit
What is gross profit?
How to calculate net profit margin
What is net profit?

Related Xero feature: 
Know how your business is performing with the business dashboard

Related Small Business Guide: 
How to manage your finances and cash flow

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