Profit and Loss Statement

We will be exploring the 'Profit and Loss Statement', 'P&L' or 'Statement of Financial Performance' which is looking that a businesses performance over a period of time. In particularly this is looking at the current financial period and is a breakdown of all the businesses revenues and expenses into various categories or sub-categories to help identify them. It is ultimately coming up with a Net Profit or Operating Income that will end up in the Retained Earnings account once closing entries have been completed. P&L statements are used extensively within businesses on a regular basis and by functional managers across many different facets. They are also used by all the relevant stakeholders to make decision around profitability and the types of returns they can expect.