Profit and Loss Statement

The Profit and Loss statement helps you to assess the financial position of a business by providing the details of incomes and expenses incurred by a business during a particular accounting period. The statement displays net profit or net loss of a business at the end of the accounting period.

Formula: Net Profit / Loss = Total Revenue - All expenses and losses

Net profit is earned only when total expenditure is less than the total revenue i.e. the difference is a positive value. Net Loss is incurred when total expenditure is greater than the total revenue i.e. the difference is a negative value.

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Related Terms

• Payroll
• Petty Cash
• Payment Terms
• Proforma Invoice
• Pro Rata
• Purchase Order