Trading, profit and loss account

A trading, profit and loss account shows the business's financial performance over a given time period, eg one year.

A trading profit and loss account is used to show sales revenue, gross profit and net profit
Sales revenue£80,000
Less costs of sales£50,000
Gross profit£30,000
Less other expenses£20,000
Net profit£10,000

The trading account shows the business has made a gross profit of £30,000 before taking into account other expenses such as overheads.

The profit and loss account shows a net profit of £10,000 has been made.