Definition
Profit and loss (P&L) is a financial statement summarising revenue, expenses, and the resulting profit or loss over a defined period. It is identical in substance to the income statement and is the most commonly used name for the document in everyday UK, AU, and NZ practice. Modern accounting platforms generate the P&L automatically from the revenue and expense accounts in the general ledger.
What a P&L means in practice
For a bookkeeper, the monthly P&L is the headline diagnostic. Revenue at the top, costs and expenses below, profit or loss at the bottom. Reading the P&L for the month against the same month last year and against the rolling three-month trend surfaces almost every operational issue that matters: a margin compression, a cost spike, a revenue concentration, a one-off expense, a missing recurring invoice.
The standard monthly review takes ten minutes. Pull the comparative P&L from Xero or QuickBooks (this month vs same month last year vs three-month average). Check the revenue line for any unexpected dip or spike. Walk down the cost lines for outliers. Drill into anything more than 20% off trend. Note unresolved items for the next reconciliation pass. The discipline catches errors at 1/12th the cost of waiting until year-end.
A practical example: a UK consultancy’s October 2026 P&L shows revenue of 32,000 (down from 38,000 in October 2025 and a 36,000 three-month average), cost of sales 11,000, gross profit 21,000, operating expenses 14,000, net profit 7,000. The bookkeeper drills into the revenue drop, sees that a major client’s October invoice was not raised (an admin oversight), creates the invoice for 6,500, and the corrected P&L shows revenue of 38,500. The early catch prevents a quarter-end VAT-return scramble.
How the P&L works by country
United Kingdom
Universally called “profit and loss” or “P&L” in everyday UK practice across bookkeepers, accountants, and SMB owners. The Companies Act 2006 uses “profit and loss account” as the formal name. The first line moved from “turnover” (the traditional UK term) to “revenue” under FRS 102, although many older businesses and practitioners still use “turnover” in conversation.
Australia
Universally called “profit and loss” or “P&L” in everyday AU practice. AASB 101 Presentation of Financial Statements uses “Statement of Profit or Loss and Other Comprehensive Income” as the formal title for lodged statements. The everyday term in BAS prep, ATO correspondence, and accountant-to-bookkeeper communication is always “P&L”.
Canada
The Canadian convention in formally published financial statements is “Statement of Operations” rather than “P&L”. The everyday term in CRA correspondence, bookkeeper-to-accountant work, and SMB practice is “P&L”. The substance is identical to any other jurisdiction.
New Zealand
Universally called “profit and loss” in everyday NZ practice. NZ IFRS calls it “Statement of Profit or Loss” for Tier 1 and Tier 2 entities, and “Statement of Surplus or Deficit” for some Tier 3 not-for-profit entities. The everyday term is always “P&L”.
Singapore
Singapore’s everyday usage is “P&L” but SFRS(I) 1 formally calls it “Statement of Profit or Loss and Other Comprehensive Income” for published statements. The substance is identical to the equivalent statement in any other jurisdiction.
Related terms
The P&L is one of the four primary financial statements:
- Income statement is the formal synonym used in UK and CA practice.
- The balance sheet shows the resulting state at period end.
- Net profit is the bottom line of the P&L.
- Gross profit is the middle line (revenue minus cost of sales).
- Operating expenses are the costs below gross profit.
- Revenue recognition determines when revenue can hit the top of the P&L.
See also
For the practical mechanics of running a P&L in Xero or QuickBooks Online, see the per-software workflow guides as they ship.
FAQ
See the answered questions above for P&L vs income statement, monthly cadence, and how to split a P&L by department or project.