Profit and loss accounts

A profit and loss account is a General ledger account that constitutes part of your Profit and Loss statement. A profit and loss account will have a General ledger category of Income, Expense, Cost of Sales, Other Income or Other Expense.

The value of a profit and loss account represents an amount of income or expense that has been incurred by your business for the current financial year. At any one time, the net profit year to date is the difference between all of your Income / Other Income accounts and your Expense / Cost of Sales / Other Expense accounts.

The value of a profit and loss account is set to zero at the start of each financial year: the value from the previous year is not carried over like a Balance sheet account.