- Profit & Loss
Shows the final outcome of the firm's trading over a particular period. The profit and loss account differs significantly from the balance sheet? in that it is a record of the business's trading activities over a period of time whereas the balance sheet is the financial position at a moment in time. It basically shows how much the business has earned from selling its product or service, and how much it has paid out in costs (production costs, salaries and so on). The net of these two is the amount of profit they've earned.