Glossary · Financial statements
Profit and loss statement (P&L)
A profit and loss statement is a financial statement that shows a business's income, costs and expenses over a period, such as a month or a year, and the profit or loss that results. Income minus cost of goods sold gives gross profit; minus operating expenses gives net income. It is also called an income statement.
Glossary / Profit and loss statement · Also called income statement, statement of operations
How it works
The P&L answers the question "did we make money?" for a period. It covers a range of dates, unlike the balance sheet, which shows one date. Income and expense accounts feed it; asset, liability and equity accounts do not.
Owners often compare P&Ls: this month against last month, this year against last year, or actual against budget. Running it by month in columns shows seasonality. The basis matters too: an accrual P&L counts invoices when issued, a cash P&L when paid.
Lenders, landlords and tax preparers ask for the P&L more than any other report. Keep each year's final version, run after the year is closed, so the figures you filed can always be produced again.
Worked example: A quarter for a small retailer
A gift shop sells $60,000 of goods in the quarter. The goods cost $33,000, so gross profit is $27,000, a gross margin of 45%.
Rent, wages, card fees and other operating expenses come to $21,500. Net income for the quarter is $27,000 - $21,500 = $5,500.
| Line | Amount |
|---|---|
| Sales | $60,000 |
| Cost of goods sold | $33,000 |
| Gross profit | $27,000 |
| Operating expenses | $21,500 |
| Net income | $5,500 |
In AcboBooks
The Profit & Loss report runs on the cash or accrual basis for any dates. Other versions show months or quarters in columns, this period against the same period last year, or the P&L by class. Click an account to see its transactions.
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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