What is a profit and loss account? It is an account which shows the revenue of a company and expenses over a particular period of time, typically either one month or combined months over a year. These figures show whether your business has made a profit or a loss over that time period. A profit and loss (P&L) statement summarises the revenues, costs and expenses incurred during a specific period of time. A P&L statement provides information about whether a company can generate profit by increasing revenue, reducing costs, or both. The account contains all other incomes like interest on investment, interest on deposit, dividend received, bad debts recovered etc. It also includes profit on sale of fixed assets, profit on sale of investment etc. P&L account is a nominal account, not a real account. Nominal account is related to income /gains and expenses/losses of a business. Profit and Loss accounts is an account in a book of an organisation to ascertain net profit or loss for a particular period of time or net result of a business.

Saket Kumar

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