One of the primary financial statements of an entity that presents its revenues and expenses during the reporting period. It shows how the revenues are matched with expenses in order to reach at the net income or net profit. If the outcome is negative, the final results (bottom line) is net loss. This statement reflects the outcome of core activities of an entity during an accounting period. A profit and loss account gives an overview of an entity’s operations over a period of time.

This account or statement consists of four key items—revenue, expenses, gains, and losses. By nature, it does not differentiate between cash and non-cash items, as it is usually complied based on accrual method. Non-cash items are expenses that appear on a statement of income (generally, classified as capital depreciation, investment gains, or losses), and do not involve any cash payment (fund flow).

Profit and loss account is also known as income statement or for short as P/L account (PnL account).