Profit and loss

Profit and loss


Profit and loss is pretty easy. It’s a basic economic concept in almost any business. And really it’s just a way to find out how much money you’re earning and how much money you’re spending. Basically profit is your plus, and loss is your minus.

In most economic or financial software programs, these profit and loss statements will be generated automatically after you enter all of your income and expenses for each month. For your income, generally, this is all of the money; using the US dollar sign just an example; that comes in at any given month. This is from receivables, maybe interest or any other reason why you would have money coming in from a company.

For your expenses, this is everything that you spend the money on throughout the month. Some of the big ones would be maybe rent or the salaries for your employees and almost anything else that you can think of that a business would have expenses for; postage, insurance and basically whatever you have to write a check for and the money that goes out. Then, for your profit and loss statement at the end, all of positive amounts will be positive numbers and the negative amounts will either have a minus or they sometimes are denoted by having the number in parenthesis and at the very end you’ll have basically your total at the bottom.

And hopefully, if you’ve done your business well, this will be a profit and it will show the number in a positive number. And at the end of each month, you’ll have a profit and loss statement.