Profit & Loss Accounts: Are you familiar?
Back to the Basics: Profit and Loss Accounts A few weeks ago, we posted a blog covering the basics of a balance sheet. This time, we will be covering the Profit and Loss accounts and what they consist of. Profit and Loss accounts are a component of the chart of accounts: The Chart of Accounts is the entire run down of a business’ accounts and their balances. This keeps track of how much money your company has, owes, and what’s coming in and out. The more accurate the information is, the more useful the reports will be, therefore watch out for errors and try to be consistent as possible when assigning accounts to transactions. In addition, Profit and Loss Accounts, display how your business is doing over a period of time. It showcases the money that is flowing in and out over a month, year, etc. This is different from a balance sheet, for it only shows your businesses assets, liabilities, and equity at one period in time. Here's a run down of ...