Profit and Loss Account

Formal

A historic record of the performance of a business listing all the gains/revenues/profits etc and deducting all the losses, costs and expenses to arrive at a ‘net’ Profit or Loss position for the historic period under review. It’s a past summary of business performance detailing exactly how the net result was achieved.

Real-world Example

A company's Profit and Loss Account for the year shows revenue, cost of sales, overheads, and the resulting profit or loss - the core statement summarising financial performance over a period, as opposed to the balance sheet's single point in time.