Why is it referred to as a Profit and Loss statement rather than simply a profit or loss statement, considering that the outcome can only be either profit or loss?

Question

Accepted Answer

The Profit and Loss statement reflects both revenues and expenses, providing a comprehensive view of a company's financial performance.

Comprehensive Overview: The term 'Profit and Loss' captures both sides of the financial equation, showing how revenues are generated and expenses incurred.
Revenue vs. Expense: It highlights the relationship between income and costs, allowing stakeholders to assess profitability and operational efficiency.
Decision-Making Tool: By presenting both profit and loss, it aids management in making informed decisions regarding budgeting and resource allocation.
Performance Measurement: The statement serves as a key performance indicator, helping to evaluate the financial health of a business over a specific period.
Example: A company may report $100,000 in revenue and $80,000 in expenses, resulting in a profit of $20,000, illustrating the importance of both metrics.

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Why is it referred to as a Profit and Loss statement rather than simply a profit or loss statement, considering that the outcome can only be either profit or loss?

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