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Simple English definitions for legal terms
profit-and-loss account
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A quick definition of profit-and-loss account:
A profit-and-loss account is a type of financial statement that shows how much money a company has made and spent over a certain period of time. It includes all the income the company has earned and all the expenses it has paid, such as salaries, rent, and supplies. At the end of the period, the profit-and-loss account is closed and the remaining profit is either kept by the company or distributed to shareholders. It helps people understand how well a company is doing financially.A more thorough explanation:
A profit-and-loss account is a type of accounting statement that shows all the income and expenses of a business over a certain period of time. It is also known as an income statement. The purpose of this statement is to determine the net profit or loss of the business during that period.
For example, if a business has $10,000 in revenue and $8,000 in expenses in a month, the profit-and-loss account will show a net profit of $2,000 for that month. This statement is important for businesses to track their financial performance and make decisions about future investments or changes in operations.