Just like the balance sheet we encountered in the previous chapter, a profit and loss account (P & L) is a standard financial document that you may have to get to grips at work. It is a statement of how much a business earns and spends over a given period, and is normally drawn up to see how much profit the business has made. If you run your own business, this is a document you’ll need to be familiar with, and if you were thinking of acquiring another business, you’d want to closely inspect the P & L of the target company.
Put simply, the difference between the income from sales and any associated expenditure is the profit or loss for the period. ‘Income’ and ‘expenditure’ here mean only those amounts that ...
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