Profit and loss report in Bokio
As its name suggests, the profit and loss report shows the profit or loss for a specific period. The profit or loss (“Calculated profit or loss”) is obtained by adding up all the income for the period, then subtracting all the expenses for the period (income - expenses = profit or loss). The profit and loss report is compiled to enable comparisons with previous fiscal years. The bookkeeping accounts starting with 3 are under “Income”, accounts starting with 4, 5, 6, or 7 are under “Costs”, and right at the bottom under “Financial income and expenses” are accounts starting with 8. These are known as profit and loss accounts.
The profit and loss report summarises what has happened in the business over a certain period, whereas the balance report shows the position at a single point in time. Together with the balance report, the profit and loss report provides a useful overview of how the company is performing. Where does the company’s revenue actually come from and what do we spend the most money on?