P&L Account

At its core, every business is primarily focused on profit. Businesses exist to make money, which involves strategically balancing income with outgoings. A profit and loss account (or P&L account) is a financial document that lists a summary of costs, expenses and revenues incurred over a fixed period of time. The purpose of profit and loss account centres on the production of financial performance statements, usually generated and analysed quarterly or annually. It is a critically important document, providing the business with the data needed to help reduce costs and increase revenues or both. Accountants must know how to analyze and work with profit and loss information, in order to better the firm’s ability to generate profit.

This tutorial provides a comprehensive introduction to profit and loss accounts, focusing on the broad profit and loss account meaning from a business perspective. Profit and loss statements are broken down and explored in-depth, along with their important relationships with business balance sheets. Discover how to use the information contained in profit and loss accounts to drive overall financial performance in the right direction.