Understanding the Profit and Loss Statement

The profit and loss statement is a summary of business revenue performance over a specific time, showing the value of products or services sold and the costs the business incurred to meet those sales. Various business costs are taken into account to measure profit. Attributable costs – cost of goods sold and expenses – as well as taxes and interest must be accounted for when determining profit. This course, part of the Balance Sheet series, describes why profit and cashflow are not the same along with other common misconceptions and explains different formats that may be used when reporting to different audiences.