Profit and Loss Statement
A profit and loss statement totals income and expenses over a date range and nets them into a single number, net income, showing whether income exceeded expenses over that stretch.
In short
Also called a P&L or income statement. It covers a range — "the P&L for March," not a single date — and lists every income and expense account with activity, netting to income minus expenses. Only income and expense accounts appear; assets, liabilities, and equity live on the balance sheet instead.
Also called: P&L, income statement, profit and loss
You might have arrived here asking
- How much did my business actually make?
- Where is all my money going?
A profit and loss statement covers a span of time and reports what was earned and what was spent within it, ending in the difference. Income minus cost of sales minus operating expenses gives net income — the number that answers whether the period made money.
The period is the defining property. A balance sheet is a photograph of one instant; this is a recording of an interval, and a P&L without a stated start and end date means nothing. The same books produce entirely different statements for August and for the year to August.
Only two of the five account types appear on it: income and expense. Assets, liabilities and equity belong to the balance sheet, which is why buying equipment does not reduce profit and why a loan repayment mostly does not either — only the interest portion is an expense.
Its other name is the income statement, and the two are the same document. What it does not tell you is whether there is money in the bank, because profit and cash answer different questions.
What people get wrong
- Asking for "the P&L as of a date" instead of a range — it's a period report, the opposite convention from a balance sheet.
- Assuming income on the P&L equals cash actually received — invoicing before payment can show income the bank account hasn't seen yet.
- Expecting a zero-activity account to appear as a zero row — accounts with no activity in the chosen range are simply left off.
Common questions
- Why does my P&L show income I haven't actually been paid for?
- That happens if income is recorded when a customer is invoiced rather than when they pay — accrual-style bookkeeping. Pure bank-import bookkeeping only records income when cash actually lands, and won't show this at all.
- Can I compare this month to last month?
- Yes — the P&L can show a comparison period alongside the current one, so two ranges of totals sit side by side without running the report twice.
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