The profit and loss account or income statement, is the summary of all income and expenses generated during an accounting period by an organization or company.

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The difference between expenses and income generated determines the result of the accounting period.

If the difference is positive, it will be a fiscal year with profits, if it is negative, it will be a fiscal year with losses.

What is the profit and loss account used for?

It is one of the most useful accounting reports to evaluate the health of a company or organization.

The profit and loss account together with the balance sheet, are the most important part of the annual accounts of any company.

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We hope this information is very useful to you.