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Are a Profit and Loss Statement (P&L) & Income Statement the Same?


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Profit and Loss statement vs Income statement, what’s the difference?

Your financial statements are the barometer for the financial health and profitability of your company. Still, you might not be clear about what each statement means and how the information can be used to analyze the success of your business. With that in mind, let’s discuss the profit and loss statement vs income statement, as well as what you can learn from these statements about your profitability.


What Is an Income Statement?


An income statement is a financial statement that shows the revenue, expenses, and net income or the loss of a business for a specific period. It is also called the profit and loss statement. Combined with the balance sheet and cash flow statement, the income statement assists you in understanding the financial health of your company.

But it is important to know what each statement provides in terms of financial information, but combined, they give you a financial picture that can help you to plan for the future of your business and determine the right opportunities to align with your company’s vision.


profit and loss statement vs income statement


Is Profit and Loss the Same as Income Statement?


They are similar since both provide information about your income, expenses, profits, and losses. The income statement can be summarized by the formula: Net income = (Total revenue + gains) – (Total expenses + losses). However, an income statement is more comprehensive than a P&L statement. The terms are often used interchangeably in many instances since the information provided is similar. An income statement versus a profit and loss statement is basically a way to analyze your company’s financial standing.



What Is the Difference Between A Profit and Loss Statement Vs Income Statement?


The main difference between the two is that an income statement is more comprehensive than a profit and loss statement. An income statement shows all of a company’s revenues, expenses, gains, and losses for a defined period. It also includes non-operating items such as interest income or expense, gains or losses from the sale of assets, and taxes. A profit and loss statement, on the other hand, only shows a company’s revenues and expenses for a specific period of time.

When you look at both of them, you begin to see the benefits of this type of detail to your analysis of the financial health of your business.

What Are the Other Important Financial Statements?


There are several types of financial statements that make up a complete financial picture of your business. Each of them provides different information, but when you combine all that information, you can analyze the financial health of your company.


profit and loss statement vs income statement


Cash Flow Statement

A cash flow statement is a valuable measure of the strength, profitability, and long-term future outlook of your company. It also can help you determine if you have enough liquidity or cash to pay your expenses, as well as predict future cash flow, which can help with creating your budget.


Balance Sheet

A balance sheet shows your company’s assets, liabilities, and shareholder equity for a specific period. It is the balance between your company’s assets against your liabilities and equity, which can be a snapshot of your financial standing.


Statement of Shareholders’ Equity

The statement of shareholders’ equity is issued as part of your balance sheet and highlights changes in the value of shareholders’ equity or ownership interest from the beginning of a given accounting period to the end of that defined period.


Income Statement Examples


There are several types of income statements, either ones that show your business making a profit or ones that show your business reporting a loss. Once you determine what your company’s profitability is, then you can make changes to your business to increase your revenue and decrease your expenses or choose specific opportunities to take advantage of as you expand.

Additionally, your income statement or P&L statement can be an indication to investors or shareholders about whether your company is worth the risk or if it is being run well.


profit and loss statement vs income statement


Income Statement Showing a Profit

Let’s look at basic information from the most recent quarterly statement for Apple. As you’ll see, Apple breaks out its revenues and expenses into products and services. Apple’s financial statement is built more for a horizontal analysis that compares the fourth quarter of 2022 to the fourth quarter of 2021 and demonstrates its profitability.

Apple, Fourth Quarter 2022
12/31/2022 12/25/2021
Net sales
Products $      96,388 $   104,420
Services $      20,766 $      19,516
Total net sales $   117,154 $   123,936
Cost of sales
Products $      60,765 $      64,309
Services $        6,057 $        5,393
Total cost of sales $      66,822 $      69,702
Gross margin $      50,332 $      54,243
Operating expenses
R&D $        7,709 $        6,306
Selling, general & admin $        6,607 $        6,449
Total operating expenses $      14,316 $      12,755
Operating income $      36,016 $      41,488
Net income $         (393) $         (247)
EBT $      35,623 $      41,241
Taxes $        5,625 $        6,611
Net income $      29,998 $      34,630
EPS $          1.89 $          2.11


Keep in mind that although an income statement contains a trove of valuable information for investors, it’s not the only game in town. Use income statements, along with balance sheets and cash flow statements, to figure out what makes sense for your company.


Income Statement Showing a Loss

An example of an income statement showing a loss is a company that has $200,000 in sales, $140,000 in COGS, and $80,000 in expenses. After you subtract the COGS from the sales, you end up with a $60,000 gross profit. But once you subtract the rest of the expenses, then you end up with a net loss of $20,000 on the income statement.


Frequently Asked Questions


  1. How do profit and loss statements and income statements help assess a company’s financial performance? You can use a P&L statement to summarize your monthly, quarterly, or annual operations, which shows where your money is going and whether your company is profitable or not.
  2. Can profit and loss statements and income statements be used interchangeably for financial analysis? Yes, they are essentially the same thing and can be used interchangeably for your financial analysis.
  3. Can profit and loss statements and income statements be used for tax purposes? Yes, profit and loss statements and income statements can be used for tax purposes. The financial statements summarize a company’s revenues, costs, and expenses incurred during a specific period.


What Is AccountsBalance?



AccountsBalance is a monthly bookkeeping service specialized for agencies & SAAS companies.

We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.

You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.

Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.

And here’s some free resources:


In Summary

Bu now you should know the difference between the profit and loss statement vs income statement. Your profit and loss statement and income statement provide the financial snapshot to let you know whether your business is profitable or not. It is also a tool you can use to analyze whether your business model needs to change, which expenses you might need to rein in, and how to capitalize on high sales in specific quarters. Working with your bookkeeper, you can create and analyze your P&L statement effectively to expand your company to the next level.


Want help with your bookkeeping? We make it easy. Get startedSpeak w/ a Founder, or Schedule a Callback

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Tracy Knepple

Tracy Knepple

As a writer and editor with 20+ years experience, Tracy Knepple offers practical tips and analysis on accounting, bookkeeping, small business, and many other topics. She has authored over 100 books as a professional writer for the Raymond Aaron Group. She received her Bachelor's degree in Communications from Indiana University.

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