Understanding the Profit & Loss Statement in QuickBooks Online
A Profit & Loss Statement (also known as an income statement) is a powerful tool that shows your business’s financial performance over a specific period. In this QuickBooks Online tutorial, you’ll learn how to read and interpret the profit and loss statement—and why it matters.
1. What Is a Profit & Loss Statement?
The Profit & Loss (P&L) Statement summarizes your business income, costs, and expenses. It helps you answer key questions like:
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Are you making a profit?
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Where is your money coming from?
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Where is it going?
This report is essential for decision-making, tracking performance, and filing taxes.
2. Understand Income, Cost of Goods Sold, and Expenses
QuickBooks Online breaks the P&L into three main sections:
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Income: The revenue earned from sales or services.
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Cost of Goods Sold (COGS): The direct costs tied to producing your goods or services.
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Expenses: Overhead and operating costs like rent, advertising, or software subscriptions.
Analyzing these categories helps you identify trends and control spending.
3. Key Accounting Formulas Explained
QuickBooks automatically calculates important figures for you using basic accounting formulas:
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Gross Profit = Income – COGS
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Net Profit (or Net Income) = Gross Profit – Expenses
These numbers reveal how efficiently your business is operating and where improvements can be made.
