Profit and Loss Statement Basics
This is the first item listed in a P&L statement and represents the total money earned from sales before any expenses.
What is Sales Revenue?
The cost of borrowing money, deducted after calculating Profit before Interest and Tax.
What is Interest?
After paying dividends, this is the amount kept by the business for future use.
What is Retained Profit?
This amount is subtracted from Sales Revenue to calculate Gross Profit. It includes direct costs like materials and labor.
What is the Cost of Sales?
This profit figure is determined before accounting for government deductions.
What is Profit before Tax?
The overall purpose of a Profit and Loss statement is to show this about a company.
What is Financial Performance?
This figure is calculated by subtracting the Cost of Sales from Sales Revenue.
What is Gross Profit?
The mandatory amount paid to the government from a business’s profits.
What is Tax?
If a company's total expenses exceed its revenue, it reports this instead of a profit.
What is a Loss?
These are operating expenses like rent, salaries, and utilities that are deducted from Gross Profit.
What are Expenses?
This represents the final profit after tax has been deducted.
What is Profit for the Period?
The financial document that complements the P&L statement by showing a company’s assets and liabilities.
What is the Balance Sheet?
This is the amount left after subtracting expenses but before accounting for interest and taxes.
What is Profit before Interest and Tax?
The portion of the Profit for the Period that is given to shareholders rather than being reinvested in the business.
What are Dividends?
The accounting period for which a P&L statement is typically prepared.
What is a Fiscal Year?