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Profit and Loss Statement: Definition and Meaning
Definition
A profit and loss statement, commonly called a P&L, is another name for an income statement. It shows revenue, expenses, and profit or loss for a period.
Why It Matters
Business owners commonly use a P&L to review operating results and compare actual performance with budgets or prior periods. It can help identify trends in revenue, direct costs, overhead, gross profit, and net income.
A P&L is most useful when accounts are classified consistently and the underlying bookkeeping and adjusting entries are current.
Example
A monthly P&L reports sales, cost of sales, operating expenses, interest expense, and net income for the month.
Related Terms
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