Income Statement Profit And Loss Account

Its also known as statement of operations or profit and loss account or p l.

Income statement profit and loss account. The income statement like the cash flow statement shows changes in accounts over a set period. Its basically summarizes the earnings generated by a company during a particular period of time. Accounting can be difficult to maintain in any size business. Income statement also known as profit loss account is a report of income expenses and the resulting profit or loss earned during an accounting period.

The balance of the profit and loss account at the end of the year represents the net profit or loss for that year which is the same figure we show as the net profit or loss in the income statement in the profit and loss account above this comes to 80 000. Income statement of a company shows how much it earned or lost during the financial year by reporting total revenues and expenses for a period generally a quarter or year. An income statement is also known as a profit and loss account statement of income or statement of operations. Federal state and local governments all require complete records of businesses to be kept in order to pay taxes and to keep an accurate record of profits and losses.

The profit and loss account has two parts albeit in the same statement. The profit and loss accounts lists all income and expenditure with the difference being they profit or loss made by the business. Example profit and loss statement p l below is an example of amazon s 2015 2017 p l statement which they call the consolidated statement of operations. The first part account calculates the profit earned.

A balance sheet gives a point in time view of a company s assets and liabilities while the p l statement details income and expenses over an extended period of time usually one year. Example following is an illustrative example of an income statement prepared in accordance with the format prescribed by ias 1 presentation of financial statements. While it is arrived at through the income statement the net profit is also used in both the balance sheet and the cash flow statement. Individuals tend to confuse income statements and profit and loss accounts.

Both the profit and loss statement and balance sheet are important financial statements but each has a different function for business owners and investors.