Profit and loss statement
Meaning & Definition
What is the P&L statement? P&L stands for profit and loss statement, and the statement summarizes a business’s income, costs, gains and losses over a set period of time as part of a company’s accounting. It details if a business has made a profit or loss, and helps businesses assess performance and control costs.
Important Features of Profit and Loss Statement
- Indicates the financial performance of the organization for a specific period of time.
- Enables calculation of profit or loss for the business.
- Gives a quick overview of income and expenses.
- Helps management monitor and control operating costs.
- Supports financial planning and business decision-making.
- Speaks to investors, lenders and other interested parties.
Legal Compliance & Applicable Rules
Is a Statement of Profit & Loss Compulsory for Companies in India? Companies are generally mandated to prepare their financial statements, which include a Statement of Profit and Loss as per the Companies Act, 2013 and other Accounting Standards or Ind AS (if applicable to the entity).
The financial statements may be also required to statutory audit and filing obligations defined by corporate law. Businesses are required to keep proper books of account and disclose information as needed.
