What is a profit & Loss statement? How is it used?
Updated: Mar 19
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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