What Is a Profit and Loss Statement?
A profit and loss statement is a financial document used by businesses. During a certain period of time, usually a quarter, a profit and loss statement lists all of the accounts receivable and accounts payable of a business. The profit of a business is defined as money that is available once the company subtracts all of its expenses from the incoming funds. A loss is something that a company does not get paid for. Two common losses include delinquent accounts and depreciation of assets.
A profit and loss statement can be used for many purposes. A profit and loss statement may be used by the owner or corporate officers. It may even be generated and discussed during shareholder meetings. It can show a company where it has grown and where there needs to be improvement. For business owners who need financial backing, a profit and loss statement may be requested by potential investors or loan officers. It enables people to determine whether you will be able to pay back the loan or the investment.
A profit and loss statement includes:
What Are the Formulas Used in a Profit and Loss Statement?
Because a profit and loss statement is a financial document. There are simple math formulas that you can use to determine your gross margin, net operating profit, net profit before taxes, and your actual net profit.
Frequently Asked Questions
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A profit and loss statement is a financial statement that is prepared for a business. A profit and loss statement covers a stated amount of time (such as a quarter or a month) and lists the revenue, all costs, and expenses that are associated with the business during that period of time.Read More
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