Profit and loss statements generally contain a number of unique sections that describe different facets of a business's overall performance. These include:
- Sales — All of the money that a business accrued by way of its various operations forms part of the overall sales number. This section simply details the business’s gross revenue, without subtracting expenses of any kind.
- Cost of Sales — This section specifies how much capital was used to create a product or provide a service.
- Selling, General, and Administrative Expense - All expenditures directly or indirectly tied to sales fall under this definition. It also includes all other costs not directly related to product development.
- Marketing — This section details all the company’s marketing and advertising expenses. It includes the costs accrued to promote the business.
- Research and Development — The R&D section in a profit and loss statement normally includes the capital expended in the pursuit of new product ideas.
- Interest Expense — When businesses leverage debt to finance operations and asset acquisition efforts, they take on an added expense that belongs in this section.
- Taxes — Taxes of all types faced by a given company must appear in this part of its profit loss statement.
- Net Income — After subtracting all expenses from gross revenue, the resultant figure goes in this section. A company's net income is the amount of money it actually made as profit over a given period of time.
A profit and loss statement provides an overview of a company’s finances over a given accounting period, such as a quarter or year. It provides details beyond the company’s gross revenue or net profit, detailing expenses such as marketing and research and development.
