Profit and Loss Account (Income Statement) - JSS3 Business studies Lesson Note

The profit and loss account, also known as the income statement, shows the financial performance of a business over a specific period. It summarizes the revenues, expenses, gains, and losses incurred by the business, resulting in the net profit or loss.

Example of a Profit and Loss Account:

Explanation:

• Operating Revenue: This includes all revenues earned from the primary operations of the business, such as sales revenue.
• Operating Expenses: These are expenses incurred in the ordinary course of business operations, such as salaries, rent, utilities, etc.
• Depreciation: This is the allocation of the cost of fixed assets over their useful lives.
• Other Expenses: These include any additional expenses not covered under operating expenses, such as interest expenses.
• Net Profit (or Loss): This is the difference between total revenue and total expenses. A positive value indicates a net profit, while a negative value indicates a net loss.