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Definition: Income Statement / Profit & Loss Report

Hint – An Income Statement is also known as a “Profit and Loss” or P&L report.

A Profit and Loss account shows what happened in a business, in terms of income, sales and expenditure, during a specific period. All quoted companies and all mid and large size registered businesses in the UK have to prepare a Profit and Loss account as part of their annual accounts.  By drawing up a Profit and Loss Account, it is possible to see whether any action is needed to maximise profit.

The Profit and Loss Account shows:

• The turnover or sales for the period. 
• The expenditure for the period. 
• The level of profit. 
• How that profit has been divided. 

 

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