White paper Profit and loss statement

Profit and loss statement (P&L) = Profit and loss account = Income statement = Cost-benefit overview

The Profit and Loss Statement is the most widely used and most misinterpreted financial statement in existence.

Why? Because most non-financial people don’t distinguish between “pay for” and “use”.

In the world of finance, also known as Financial Management, we make this distinction explicitly because you do need a full bank account for the first and not the second.

In other words, for a financial person it is very important whether you are talking about something that has to be paid for (and for which sufficient resources must be available) or about using something (which is a shame because it cannot be consumed again but which does not require cash.)

There is also a very big difference between days worked for your boss and salary received..