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The Profit & Loss report, often called the P&L or income statement, explains financial performance over a period. It answers: Did the business generate more revenue than expense during this period, and where did the result come from?

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What the report measures

The report groups posted revenue and expense activity for the selected period. Revenue increases the business’s operating result. Expenses reduce it. The difference produces profit or loss for the period. Unlike the Balance Sheet, which describes a position at a point in time, Profit & Loss is about activity during a period.

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Revenue is not the same as invoice total

This is one of the most important Lynka accounting distinctions. A customer Invoice can include tax and other billing components. The revenue account represents the revenue portion according to the posting logic. Tax can belong to a separate tax liability account. Therefore: invoice total ≠ automatically the same as accounting revenue Both numbers can be correct.

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Revenue is not the same as cash

The P&L can recognize revenue before the customer has paid. Cash only changes when settlement activity actually clears according to the payment and accounting workflow. That means a profitable month can still have poor cash collection. Use Accounts Receivable Aging and Cash Flow alongside P&L when you want the full picture.

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Expenses and supplier activity

A Purchase Order is not automatically an expense. A supplier Bill, inventory receipt, asset purchase, or Journal can affect Accounting differently depending on what the transaction represents. Do not compare total Purchase Orders directly with P&L expense and assume a mismatch is wrong.

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What to investigate when profit looks wrong

Check:
  • whether the report period is correct
  • whether the relevant Journals are posted
  • whether revenue and expense accounts are classified correctly
  • whether a source transaction was duplicated or reversed
  • whether tax is being mistaken for revenue
  • whether inventory cost or another recognized cost should be present
  • whether the user has the correct financial report scope and permissions
Then use the General Ledger to trace the account activity.

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How an owner should use P&L

Do not only read the final profit number. Compare the components:
  • revenue trend
  • major expense categories
  • gross or operating margin where your account structure supports it
  • unusual one-off costs
  • changes from the previous comparable period
The report is most useful when it helps you ask why the business result changed.

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P&L and Sales reports answer different questions

Sales reports can show won Deal value, pipeline, and win rate. P&L shows posted accounting performance. A Deal can be won before invoicing. An Invoice can be posted before payment. Revenue and cash can occur at different moments. The reports should connect, but they should not be forced to match as if they measure the same event.
Last modified on September 7, 2026