profit and loss account


profit and loss account
profit and loss account or profit and loss statement
Fin
the summary record of a company’s sales revenues and expenses over a period, providing a calculation of profits or losses during that time.
Abbr. P&L
EXAMPLE
Companies typically issue P&L reports monthly. It is customary for the reports to include year-to-date figures, as well as corresponding year-earlier figures to allow for comparisons and analysis.
     There are two P&L formats, multiple-step and single-step. Both follow a standard set of rules known as Generally Accepted Accounting Principles (GAAP). These rules generally adhere to requirements established by governments to track receipts, expenses, and profits for tax purposes. They also allow the financial reports of two different companies to be compared.
     The multiple-step format is much more common, because it includes a larger number of details and is thus more useful. It deducts costs from revenues in a series of steps, allowing for closer analysis. Revenues appear first, then expenses, each in as much detail as management desires. Sales may be broken down by product line or location, while expenses such as salaries may be broken down into base salaries and commissions.
     Expenses are then subtracted from revenues to show profit (or loss). A basic multiple-step P&L looks like this:
     P&Ls of public companies may also report income on the basis of earnings per share. For example, if the company issuing this statement had 12,000 shares outstanding, earnings per share would be $5.12, that is, $61,440 divided by 12,000 shares.

The ultimate business dictionary. 2015.

Look at other dictionaries:

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  • profit and loss account — ► NOUN ▪ an account to which incomes and gains are credited and expenses and losses debited, so as to show the net profit or loss …   English terms dictionary

  • profit and loss account — P & L account 1) An account in the books of an organization showing the profits (or losses) made on its business activities with the deduction of the appropriate expenses. 2) A statement of the profit (or loss) of an organization over a financial …   Accounting dictionary

  • profit and loss account — P & L account 1) An account in the books of an organization showing the profits (or losses) made on its business activities with the deduction of the appropriate expenses. 2) A statement of the profit (or loss) of an organization over a financial …   Big dictionary of business and management

  • profit and loss account — noun an account compiled at the end of an accounting period to show gross and net profit or loss • Syn: ↑profit and loss • Hypernyms: ↑account, ↑accounting, ↑account statement * * * ˌprofit and ˈloss account [profit and loss account] …   Useful english dictionary

  • profit and loss account — 1. A statement showing a company s income and expenditure over a period of time, usually one year. Part of the financial statements of the company. Dresdner Kleinwort Wasserstein financial glossary 2. A reserve in a company s balance sheet,… …   Financial and business terms

  • profit and loss account — UK / US noun [countable] Word forms profit and loss account : singular profit and loss account plural profit and loss accounts business a document that shows how much money was received and spent by a company during a particular period of time,… …   English dictionary

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  • profit and loss account — profit and loss ac,count noun count a document that shows how much money was received and spent by a company during a particular period of time, and whether or not it made a profit …   Usage of the words and phrases in modern English


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