The Definitive Guide to Business Finance: What smart managers do with the numbers, Second Edition

The income statement, or profit and loss account

In a curious departure from the pessimism for which we have come to know and love bean counters, the American branch of their family has managed to give the profit and loss statement (P&L) an optimistic name. They call it an income statement, somehow ignoring the fact that it also includes costs – a lot of them too. Moreover, in the dismal days of the early millennium, when corporations around the world were announcing record losses, income statement might be considered a contradiction in terms. I stick with the term profit and loss because it seems less ambiguous, but the term income statement is increasing in popularity worldwide.

P&L – what it is

A profit and loss account is exactly what it ...