FAQs
A profit and loss statement (P&L), also called an income statement, is a financial report that shows your revenue, expenses, and profit for a specific time period. Your P&L can help you track your business performance over time and make informed decisions about where to allocate your resources.
What is the definition of profit and loss in simple terms? ›
Your total profit or loss 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. A P&L statement can also help you calculate profit margins, which show how good the business is at converting revenue into profits. See related terms.
What is a profit and loss account answer? ›
What is a profit and loss account? A profit and loss account shows a company's revenue and expenses over a particular period of time, typically either one month or consolidated months over a year. These figures show whether your business has made a profit or a loss over that time period.
How do you explain a P&L? ›
A profit and loss statement includes a business's total revenue, expenses, gains, and losses, arriving at net income for a specific accounting period. Management analyzes a P&L to determine how to increase profitability by increasing revenue, lowering costs or both.
What is a profit and loss statement for dummies? ›
It's a snapshot of your whole business as it stands at a specific point in time. A profit and loss statement describes how profitable your business is. It shows you how much money flowed into and out of your business over a certain period of time.
What is profit and loss answer in one sentence? ›
A profit and loss statement is a financial statement businesses use to outline income and expenses over a specific period.
What is a profit and loss statement in short? ›
A P&L statement shows a company's revenues and expenses related to running the business, such as rent, cost of goods sold, freight, and payroll. Each entry on a P&L statement provides insight into how much money a company made and spent.
How to answer P&L questions in an interview? ›
This is more of a mindset than anything. Tell them, though you were not directly responsible for p&l, that you understand it on a fundamental level and that you are looking forward to coming up to speed in this area and being in a position where you will have a more active role with it.
How to explain profit and loss to students? ›
The profit is the amount gained by selling an article at a price greater than its cost price. In contrast, the loss is the amount lost by selling an article for less than its cost price.
What is a statement of profit and loss simple? ›
Total Revenues - Total Expenses = Net Income
A P&L statement compares company revenue against expenses to determine the net income of the business. Subtract operating expenses from business income to see your net profit or loss. If revenues are higher than total business expenses, you're making a profit.
Suppose a shopkeeper buys a pen at Rs 8 from the market and sells it at Rs 10 at his shop. If the cost is less than the Selling price then it's a profit. If the cost price is more than Selling Price then it's a loss.
What best describes a profit and loss statement? ›
A profit and loss (P&L) statement, also known as an income statement, is a financial statement that summarizes the revenues, costs, expenses, and profits/losses of a company during a specified period. These records provide information about a company's ability to generate revenues, manage costs, and make profits.
What best defines a statement of profit or loss? ›
A profit and loss statement (P&L), also called an income statement or statement of operations, is a financial report that shows a company's revenues, expenses and net profit or loss over a given period of time. The time period can be of any length, but it is usually a month, quarter or year.
What is profit and loss account simplified? ›
What is a profit and loss account? The profit and loss account forms part of a business' financial statements and shows whether it has made or lost money. It summarises the trading results of a business over a period of time (typically one year) showing both the revenue and expenses.
What is the correct term for profit and loss? ›
Answer and Explanation:
Another name for a profit and loss statement is the income statement.
What is the meaning of loss of profit? ›
The concept of 'loss of profit' is used in a broad sense, defined as any difference between the actual profits generated by an undertaking and the profits it would have generated in the absence of an infringement.
What is a profit and loss also called? ›
A P&L statement, more commonly labeled "statement of income" or "income statement," is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, usually a fiscal year or quarter.