What is a profit & Loss statement? How is it used?

A profit and loss statement (also called a P&L or Income Statement) is used for calculating profit by comparing revenue to expenses  Cost of goods sold & Operating expenses

To determine how much money your business made you can use these equations

Gross Profit - Cost of goods sold - operating expenses =  Profit or a loss

HERE'S AN EXAMPLE:

You sell your products at your store leaving you with a total gross profit of “X”

This gross profit (“X”)  is then subtracted by the cost of goods sold and operating expenses to reveal your Net Income 

X - ( Cost of goods sold + Operating expenses) =  Profit / Loss

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