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About the Profit and Loss

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Summary

The Profit and Loss report in Sage Accounting.

Description

The Profit and Loss report shows your business’ sales and expense totals over a given period. It subtracts the associated costs from the sales, to show you what’s left as profit. The Profit and Loss report is sometimes called an Income Statement or Profit and Loss Statement.

Resolution

Why is it important?

The Profit and Loss report shows if the business is making or losing money. It's typically reviewed by business owners, managers, or a board of directors to make business decisions. The business may also use the Profit and Loss report for taxes and finance applications, to present a view of the business to banks, investors, customers, and suppliers.

The report shows investors and lenders the profitability of your business over time. This allows them to evaluate whether your business can repay its loans and interest and to see how much income your business generates. A Profit and Loss report run for internal use may include more detail such as sales revenue sources and direct expense analysis. Stakeholders analyse the details to make informed decisions. For example, to approve or reject plans to open a new branch, close a department, or to adjust production levels.

What's on the report 

What's not on the report

 The following items are not included in the Profit and Loss report:

  • Draft and proforma invoices 
  • Gratuities collected and paid
  • Sales taxes
  • Income taxes
  • Payments and receipts
  • Income such as grants or cash injected by the owners
  • Purchases of significant equipment or assets
  • Loans taken or repaid
  • Owner drawings
  • Investments




Related Solutions

Run the Profit and Loss report