From the course: A Guide to Understanding Financial Statements

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What is the profit and loss?

What is the profit and loss?

From the course: A Guide to Understanding Financial Statements

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What is the profit and loss?

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- [Instructor] Now we turn our attention to the first financial statement, the profit and loss. You may also hear the term an income statement, which is really the same thing. The profit and loss tells you about the performance of your business. It showcases all the amounts that you're generating in income, and all the amounts that you're generating in expenses. Let's go through these specific sections at a high level. First, we have our revenue. Under the accrual basis of accounting, which is what we'll be using for the remainder of the course, your revenue represents how much you're actually earning in income. So like we spoke about earlier, this means that anytime you deliver your product or service under the accrual basis of accounting, you'll recognize what is known as revenue. We then have cost of goods sold, which is pretty much what it sounds like. It is the cost to deliver your product or service. So if I was in a chocolate bar company, the actual cost of the chocolate bars…

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