What is a Profit and Loss Account?

A Profit and Loss Account (P&L) sometimes also referred to as an Income Statement, summarises the revenue, costs and profit or loss of a business over a period of time.

The top section, the trading account, shows the gross profit a business has made from its principal activity (its business). It reports sales for the period less the cost of sales (costs which are directly attributable to the sales) to give a gross profit.

The lower section then lists ‘overheads,’ costs not directly attributable to sales such as heat and light, rent and advertising. These are general costs of running a business and are deducted from gross profit to arrive at an overall net profit or loss.

Evelyn Allen lives in Bristol. She works as a makeup artist and a writer. She covers topics about The Local Accounts Department Service Bristol, The Online Local Bookkeeping in Bristol, Management Centre for Financial Bristol. In her free time, she likes to spend time with friends and family.

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