Want to keep learning?

This content is taken from the RMIT University's online course, Online Business: Pricing for Success. Join the course to learn more.
Image of graphs in a blender
Bringing it all together

Calculate your profit and loss - bring it all together

So far, you have learnt that the income statement is also referred to as a profit and loss (P&L) report and that it reports the financial performance for a business for a specific period.

The statement consists of four components: income, cost of goods sold, expenses and the profit or loss. Business owners can use this statement to compare and monitor performance.

Case Study

You followed Paul as he has worked through the past three steps to construct his income statement. He identified his Income, cost of goods sold and business expenses and has now completed his income statement, as shown below.

Paul's Income Statement

When reading Paul’s statement, there is a calculation:

P&L Equation

In Paul’s case he has made a profit of $2,140 for the three months to 30 September.


Discuss with other learners the nature and purpose of the ‘income statement’’ and how it can be used to monitor business performance.

Take a look at the articles in the See Also section below for additional information about income statements.

Do you think that Paul has made a reasonable profit for the three months?

Justify your answer in the Comments area.

Share this article:

This article is from the free online course:

Online Business: Pricing for Success

RMIT University