Profit and Loss Account
Subject: Accounting | Topics:

Definition: 

Profit and Loss Account is a standard financial document that summarizes a company’s revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year.

It is important that both investors and company managers be able to read and understand this document in order to understand the company’s financial condition. For a description of the line items typically found in a company’s income statement, read How to Read an Income Statement. You can also see a Sample Income Statement there.

Example Profit and Loss Statement

Total revenue$1,000,000100%
LessCost of Goods Sold$        426,20042.6%
Gross Profit$573,80057.4%
LessExpenses
Accounting and legal fees$11,700
Advertising$15,000
Depreciaion$38,000
Electricity$2,700
Insurance$15,200
Interest and bank charges$27,300
Postage$1,500
Printing and stationary$8,700
Professional memberships$1,800
Rent for premises$74,300
Repairs and maintenance$21,100
Training$6,900
Vehicle operating costs$20,000
Wages and salaries$223,500
Workers compensation$6,500
 All other expenses$         14,100
LessTotal Expenses$       488,30048.8%
EqualsNet Profit (BOS)$85,5008.6%

BOS = Before owners salary

Profit and Loss Account

Related Accounting Paper: