A Profit & Loss account or P&L is a report of your business's trading during a given period of time, usually one year (unless you are in your first or last period of trade)
It shows your business's income from sales and other items such as bank interest, less its expenses.
Expenses might be those directly linked to your sales, such as buying goods to sell to your customers - these type's of costs are often referred to as Direct Costs or Cost of Sales - or they might be general administrative / running expenses, such as stationery, software or professional fees.
The expenses are taken away from the income to give your business's profit for the period.
This isn't the same as the cash in its bank account, because there are likely to be non-cash items in the profit and loss account. For example, your business might not have been paid for all of its sales. The sales figure in the profit and loss account is for the sales invoiced during that period of time, so the invoices with dates covered by this period. Money received from customers in respect of invoices goes on to the balance sheet.
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