The Importance of Profit and Loss Account (P&L Account)
Profit and Loss Account (P&L Account), or an income statement, contains financial data which business stakeholder groups find extremely useful. It shows the Sales Revenue, all business costs and profit or loss of a business over a given period of time.
Earning Profit is the main objective of all businesses in the private sector of the economy. However, even for non-profit organizations and those in the public sector, it is important to make a surplus in order to survive and keep operating.
Profit creates an incentive for most businesses to do well. After all, if a business does not earn Profit, or surplus, it would struggle to survive.