Profit and loss introduction
The profit and loss report is also called the income statement. This is a summary of the income and expenses for a given period of time.
When to use
You'll want to review the profit and loss as one of your tools to keep an eye on the health of your business. But also to plan by looking back at historical income and expense trends.
Locating the profit and loss:
- In the left hand menu, click on the word reports
- In the favorites box, click on the text profit and loss (note: if you click on the star, this report will no longer be in the favorites box)
Reading the profit and loss:
- The profit and loss comes in two parts: income and expenses
- There are usually two kinds of income:
- Income that is earned as a part of normal operations of the business
- Other income which is income collected outside of the normal operations of the business, an example of this is interest earned on your savings account balance
- There are usually have two kinds of expenses:
- Cost of sales which is the cost of the products or services you've sold. You might also see this called cost of goods sold or cost of labor.
- Expenses that are a part of normal operations of the business
Hints & tips
- The profit and loss report is a snapshot in time, it is not a running balance.
- The total net income or net loss does not represent the balance in your checking account.
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