Explained
Also called the profit and loss statement. It covers a period — a month or a year — unlike the balance sheet, which describes a single moment.
Related terms
- Balance sheetA balance sheet shows a business’s assets, liabilities and equity at a date; assets always equal liabilities plus equity.
- Trial balanceA trial balance lists the balance of every account at a date, with total debits equal to total credits.
- Cost of goods soldCost of goods sold is the cost of the items sold in a period, deducted from sales to reach gross profit.