Profit and Loss account: Difference between revisions
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''Financial reporting''. | |||
1. | (P&L or PL or PNL). | ||
1. ''Primary financial statements.'' | |||
A profit and loss account is a primary financial statement, also known as an ''income statement'', ''statement of profit or loss'' or ''statement of operations''. | |||
It shows the revenues earned in a period, matched with the expenditures incurred in the same period, to arrive at a figure of net profit or loss ''for that period''. | |||
Under the 'double entry' accounting convention, income items in the Profit and loss account are Credits (CR) and expenses are Debits (DR). | Under the 'double entry' accounting convention, income items in the Profit and loss account are Credits (CR) and expenses are Debits (DR). | ||
A net profit is a Credit in the Profit and loss account. | :A net profit is a Credit in the Profit and loss account. | ||
A net loss is a Debit in the Profit and loss account. | :A net loss is a Debit in the Profit and loss account. | ||
Under International Accounting Standards, the profit and loss account is superseded by the ''Statement of profit or loss and other comprehensive income''. | |||
Net profits or losses <u>for the period</u> in the | 2. ''Balance sheet account - reserves.'' | ||
The profit and loss account is also another name for the ''Profit and Loss reserve'' in the balance sheet. | |||
Like all other accounts in the balance sheet, this shows the cumulative position, incorporating ''all'' periods from the establishment of the entity up to the balance sheet date. | |||
Net profits or losses <u>for the single period</u> in the primary statement feed through in turn to the Shareholders' funds (<u>cumulative</u> retained profits or losses) in the 'bottom half' - reserves section - of the Balance sheet (as <u>at the end of the period</u>). | |||
== See also == | == See also == | ||
* [[Account]] | |||
* [[Accruals concept]] | * [[Accruals concept]] | ||
* [[Attributable profit]] | * [[Attributable profit]] | ||
* [[Balance sheet]] | * [[Balance sheet]] | ||
* [[Cash flow statement]] | |||
* [[Credit balance]] | * [[Credit balance]] | ||
* [[Debit balance]] | * [[Debit balance]] | ||
* [[Environmental profit and loss]] | |||
* [[Financial reporting]] | |||
* [[Financial statements]] | * [[Financial statements]] | ||
* [[Income statement]] | * [[Income statement]] | ||
* [[International Accounting Standards]] | |||
* [[Loss]] | * [[Loss]] | ||
* [[Primary statements]] | |||
* [[Profit]] | * [[Profit]] | ||
* [[Profit and Loss reserve]] | * [[Profit and Loss reserve]] | ||
* [[Reserves]] | |||
* [[Statement of changes in equity]] | |||
* [[Statement of comprehensive income]] | |||
* [[Statement of profit or loss and other comprehensive income]] | * [[Statement of profit or loss and other comprehensive income]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
Latest revision as of 14:28, 6 July 2022
Financial reporting.
(P&L or PL or PNL).
1. Primary financial statements.
A profit and loss account is a primary financial statement, also known as an income statement, statement of profit or loss or statement of operations.
It shows the revenues earned in a period, matched with the expenditures incurred in the same period, to arrive at a figure of net profit or loss for that period.
Under the 'double entry' accounting convention, income items in the Profit and loss account are Credits (CR) and expenses are Debits (DR).
- A net profit is a Credit in the Profit and loss account.
- A net loss is a Debit in the Profit and loss account.
Under International Accounting Standards, the profit and loss account is superseded by the Statement of profit or loss and other comprehensive income.
2. Balance sheet account - reserves.
The profit and loss account is also another name for the Profit and Loss reserve in the balance sheet.
Like all other accounts in the balance sheet, this shows the cumulative position, incorporating all periods from the establishment of the entity up to the balance sheet date.
Net profits or losses for the single period in the primary statement feed through in turn to the Shareholders' funds (cumulative retained profits or losses) in the 'bottom half' - reserves section - of the Balance sheet (as at the end of the period).
See also
- Account
- Accruals concept
- Attributable profit
- Balance sheet
- Cash flow statement
- Credit balance
- Debit balance
- Environmental profit and loss
- Financial reporting
- Financial statements
- Income statement
- International Accounting Standards
- Loss
- Primary statements
- Profit
- Profit and Loss reserve
- Reserves
- Statement of changes in equity
- Statement of comprehensive income
- Statement of profit or loss and other comprehensive income
