Income statement (P&L)

A statement of revenue, costs and profit over a period. Revenue − COGS = gross profit; gross profit − OpEx = operating profit.

Example

$120k revenue − $24k COGS = $96k gross profit; − $150k OpEx = a $54k operating loss.

It shows performance over a period, not what is in the bank. Read it beside the cash flow statement or it will mislead you.

Balance sheet — A snapshot at one moment of what you own (assets), what you owe (liabilities), and the difference (equity).
Cash flow statement — Where cash actually came from and went, split into operating, investing and financing activities.
Gross margin — Revenue minus the direct cost of delivering it, as a percentage of revenue.

Bookkeeping, accounting and when you need a person — Software handles bookkeeping. A human is worth it for tax, equity and anything with a filing deadline. (12 min)
Cash or accrual — the choice that changes every number — The same month can be your best or your worst depending on which basis you use. What each one shows, and why you need to be able to read both. (12 min)
Building a chart of accounts — The twenty-odd categories every transaction lands in. Get this right once and every report you ever run is useful; get it wrong and no amount of software helps. (12 min)
Producing your own P&L and cash view — Turning categorised transactions into the two reports you will actually use, and the six numbers you should be able to recite from memory. (14 min)
Reading an income statement — The P&L, top to bottom. Fifteen minutes and you will never be lost in an accountant's email again. (12 min)