The profit and loss account is an account in a company’s accounting books which credits a company’s incomes and gains and debits the company’s expenses and losses. The result is shown as the net profit or net loss over the given period of time, which is most commonly a financial year.
The profit and loss account shows the revenue which a company made in a given period and deducts the expenses and costs which are charged against the company’s revenues. The result will indicate the company’s net income or net profit or in the case of a loss the net loss.
The net profit or net loss is used in the company’s balance sheet