What is profit and loss account

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Accepted Answer

A profit and loss account is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time.

It shows the company's financial performance by detailing the total revenue generated and the expenses incurred.
The difference between the revenue and expenses is the net profit or loss for the period.
It helps in assessing the profitability and financial health of a business.
Common components include sales revenue, cost of goods sold, operating expenses, and net income.
Example: A company's profit and loss account for the year ended December 31, 2020, shows total revenue of $1,000,000, total expenses of $800,000, and a net profit of $200,000.

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