In the previous chapter, you have studied about the balance sheet. It is intended for reporting the value of assets, liabilities and owners' equity at a particular point in time. It does not disclose any thing about the details of the business. So another statement is required to summarize revenues and expenses of the particular period. This statement is referred to as profit & Loss Account, Income statement or Income summary.

The Profit & Loss account summarizes all the revenues or incomes and all the expenses for earning that revenue showing the net difference, that is profit or loss for the period.