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Accounting Terms
Income Statement (P&L)
Definition
A financial statement showing revenue, expenses, and profit over a period of time.
Overview
The income statement (profit and loss or P&L) shows financial performance over time. It starts with revenue, subtracts expenses, and shows net profit or loss.
Example
Monthly P&L: Revenue ($50,000) - Expenses ($35,000) = Net Profit ($15,000).
Best Practices
Review monthly, compare to budget and previous periods, and identify trends.
Common Mistakes to Avoid
Confusing with cash flow
Not reviewing regularly
Missing expenses
Frequently Asked Questions
What's the difference between income statement and balance sheet?
Income statement shows performance over time; balance sheet shows position at a point in time.