Tag: Financial Statements and Record Keeping

Definition An income statement, also known as a profit and loss statement (P&L), is a financial report that summarizes a company’s revenues, expenses, and profits or losses over a specific period, typically a quarter or a year. It provides insight into the company’s operational efficiency, profitability, and overall financial performance. The income statement is one of the three main financial statements, alongside the balance sheet and cash flow statement, and is crucial for investors, analysts, and management to assess the financial health of a business.

Definition A ledger is a fundamental accounting record that provides a detailed account of all the financial transactions of a business. Acting as the core of the company’s financial records, ledgers are used to classify and summarize individual financial transactions as part of the double-entry bookkeeping system. This systematic process ensures accuracy and accountability in financial reporting. Types of Ledgers General Ledger (GL): The master ledger containing a summary of all transactions recorded in various accounts, including assets, liabilities, equity, revenue and expenses.