Earnings and Losses

Understanding a Business's Profit & Loss Account/Statement

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In Brief...

Completing a Profit & Loss Statement is a highly charged activity at the end of the financial year. This article will examine the nature of the profit & Loss Account and its presentation as a statement.. All the expense accounts are closed and their balances are debited to the P & L account.. Image 2 is the Profit & Loss Statement of a trading firm; it clearly identifies gross profit from net profit.. Shareholders could be baffled if presented with an accountant's version and as this account is of such importance to the shareholders, the same information is presented in a format that a lay-person can understand, the P & L Statement..

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