The Profit and Loss report displays the total sales and expenses of your business during a specific period. It calculates the profit by subtracting the associated costs from the sales. The Profit and Loss report is also known as an Income Statement or Profit and Loss Statement.

• It shows if your business is making or losing money
• It shows where you're making money
• It shows you how much you're spending and what on

What's on your profit and loss

Sales

How much you've earned through selling goods or services or from other income streams.

Direct Expenses

Also called the Cost of Sales. Represents the cost to you of selling your goods and services, such as the cost of raw materials, staff, or purchasing a product to resell.

For example, you will spend money on food and staff if you own a restaurant.

Overheads

Overheads, also known as Expenses or Indirect Expenses, play a role in the general running expenses of a business, unlike Direct Expenses, which are directly related to a specific cost object such as a service or product.

Some examples of overheads are:

• Wages for non-sales employees
• Rent
• Repairs
• Bills for utilities etc
• Advertising and marketing
• Travel costs

Gross profit

The amount of money you make from your sales is less than your direct expenses.

Net Profit

The amount left over when after paying all your bills and other expenses.