3.9

## RMIT University

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.

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

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

Discussion

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