Business Finance Articles

A profit and loss statement (P&L) summarizes your business’s revenues and expenses over a given period of time – usually a quarter or fiscal year.

A basic P&L lists net revenue at the top, along with primary income sources such as delivering or producing goods, rendering services, or other activities that constitute ongoing operations. Income from sources other than primary business operations, such as rental income, patents or sales of fixed assets, is itemized separately.

The revenue section is followed by various categories of expenses. Operating expenses can include:

•    General and administrative expenses such as management salaries, legal and professional fees, utilities, insurance, depreciation of buildings and equipment, rent, and supplies

•    Selling expenses such as sales salaries, commissions, travel expenses, advertising, freight and shipping

•    Production-related expenses such as raw materials, equipment maintenance and repair, and labor

•    Depreciation for fixed assets that have been capitalized on the balance sheet

Nonoperating expenses are costs that are not related to primary business operations. Irregular items are generally unusual and nonrecurring. They are reported net of taxes.

What’s left at the end – the bottom line – is your company’s net income or profit.