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How to make Profit and Loss(Income) Statement with Example

 How to make Profit and Loss(Income) Statement with Example

What is a Profit & Loss Report

What is a Profit & Loss Report (also known as an Income statement) is a type of financial report that has one main purpose: To show how easy it is for a company to create new wealth.

Understanding the rationale of the report and learning how to use it can help you to understand how companies generate new wealth, help managers to improve the way the company generates wealth, and more importantly, also can help you identify businesses that do generate wealth easily, opening the door to using this information to generate a lot of wealth for yourself and your family.

It is an incredibly easy report and well worth your while to understand.

Basics of Profit and Loss/ Income Statement

The profit and loss account is a way of calculating net profit and is, therefore, an important guide as to the profitability of the business.

In accountancy, there are three important accounts, the Trading, Profit and Loss Account, and the Balance Sheet. the profit and loss account the profit loss account is a summary of revenues and expenses for a certain period of time.

it's the balance that's between revenue and expenses.

so it's the difference between revenue and expenses and that's equal to net income or net loss and net income is just another way of saying profit.

very simple profit and loss account we have revenue of ten thousand seven hundred and ninety-three and costs of five thousand three hundred and eighteen and subtract one from the other and you get the net profit 5475 so very very straightforward exercise take away cost from revenue. it is a profit and loss account after all so that's what it would suggest.


  • revenues are gross sales that his money received for goods and services sold.
  • goods returned and discounts are deducted from gross sales to yield net sales.
  •  companies may record their revenues and costs on either an accrual or cash basis.


  • an accrual basis records revenues and costs in the year in which the sales take place.
  • The revenue from the sales may not be received until a future time period.

cash basis:

  • A cash basis records revenues and costs in the year in which the payment is received.


  • expenses may be classified into two parts the cost of goods sold is calculated as follows.
  • opening inventory.
  • purchases.
  • less closing infant inventory.
  • cost of goods sold.

The Income Statement Explained (Profit & Loss / P&L)

The 'Income Statement', or 'Profit and Loss Statement' (P&L) is one of the three major Financial Statements, along with the Balance Sheet and the Statement of Cash Flows. In this tutorial, you'll find out what the Income Statement is and how you can use it to measure a business's financial performance.

we're going to cover the income statement also known as the profit and loss statement or the P&L for short. This is one of the three major financial statements in accounting along with a balance sheet and the cash flow statement. Collectively these reports give us an impression of a business's financial health so it's important that we understand how they work.

An income statement is the summary of a business's revenues and expenses over a period of time. In its basic form, an income statement looks like this.

It's a summary of a business's revenues and expenses over a period of time. When we take our total revenue and subtract our expenses from it then we work out our profit or our loss.

We make a profit when our revenues exceed our expenses and on the flip side, we make a loss when our expenses are more than the income we've earned.

Financial Statement: Income Statement, Balance sheet for IGCSE, IB Curriculum

Financial Statement: Trading account, Profit and Loss Account, Balance sheet Financial Accounting for IGCSE,  IB Curriculum and for international students, for university students, school students, finance student: Trading, Profit and Loss, Balance sheet

Profit and Loss Statement with Example

Profit & Loss Statement – The lifeblood of your business.  Simplified and exemplified with examples in this short video.

show you exactly how to put together a profit and loss statement what a profit and loss statement is is why it's important.

How to Prepare an Income Statement (Step by Step)

how to create an income statement I'm gonna move my video over so that it doesn't block anything.

Understanding a P&L (Income statement/profit & loss )

In 8 minutes, you'll understand the basics of one of the most useful financial tools - the income statement (otherwise known as the Profit & Loss (P&L) statement).  It can be used professionally or personally, ensuring profitability and building wealth!

one of the skills you should have as a manager is understanding how the financials work and especially how the area that you are responsible for impacts the overall financials of the organization.


  • Restaurant example
  • Value
  • Takeaways
  • Sample P&L

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