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

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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:

Particulars	Amount (₦)
Sales Revenue	XXXX
Less: Cost of Goods Sold (COGS)	(XXXX)
Gross Profit	XXXX
Operating Expenses	(XXXX)
Depreciation	(XXXX)
Other Expenses	(XXXX)
Total Expenses	(XXXX)
Net Profit (or Loss)	XXXX

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.