The profit and loss statement, or P&L, is a name that is often used for what today is the income statement, statement of income, statement of operations, or statement of earnings. In other words, the profit and loss statement reports a company's revenues, expenses, and most of the gains and losses which occurred during the period of time specified in its heading.
The profit and loss statement's period of time could be a year, a year-to-date period such as nine months, a quarter of a year, one month, four weeks, 52 weeks, etc. (A few gains and losses will not be reported on the profit and loss statement and will instead be reported on the company's statement of comprehensive income.)
Under the accrual basis (or method) of accounting the revenues and expenses reported on the profit and loss statement should be:
- the revenues (sales, service fees) that were earned during the accounting period, and
- the expenses (cost of goods sold, salaries, rent, advertising, etc.) that match the revenues being reported or have expired during the accounting period
Today, the bottom line of this financial statement will appear as net income, which is the net amount of the revenues, expenses, gains, and losses being reported.