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B6.1 Read a profit and loss report
B6.2 Read a balance sheet
B6 Skill check: First reports

Step 1 of 6

New words in this lesson

Profit and loss

A report of income minus costs and expenses for a period, showing whether the business made a profit.

Gross profit

Income minus cost of goods sold: what's left from sales after paying for what was sold.

Net income

What's left after all costs and expenses are taken from income. A negative number is a net loss.

Accounting period

The length of time a report covers, usually a month, a quarter or a year.

Look up any other word in the glossary

Read it from top to bottom

The (P&L) answers "did we make money?" for a period, such as a month.

Section	What it shows
Income	What the café earned from sales
Cost of goods sold	The direct cost of what it sold: beans, milk, pastry ingredients
	Income minus cost of goods sold
Expenses	The costs of running the café: rent, utilities, cleaning and so on
	Gross profit minus expenses: the profit (or loss) for the period

It uses the accrual basis here: invoices count when they're sent, and bills when they arrive.
Always check the dates at the top. A report for the wrong period gives the wrong answer.

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