A company’s profit and loss statement, or P&L, is a financial document that reflects its capability to make more profit. It is a summary of everything the company has spent and earned, as well as the net earnings of the company.
The figures involved are gathered within a specific period of time. This period of time may vary but is usually one year or one quarter. Other terms used to refer to the profit and loss statement are statement of profit and loss, income statement, and income and expense statement.
Of the different kinds of financial reports that companies publish on a regular basis, the profit and loss statement is at par with the balance sheet in terms of importance. How do these two significant financial reports differ from each other? The major difference lies in the time frame involved. For the balance sheet, the time frame is more like a snapshot – an instant in time, or a date. It reflects the financial status of a company on a given date. On the other hand, the profit and loss statement gives a broader and more detailed view of the finances of the company. As mentioned above, it shows the expenses and income of the company over months, even up to a year.