The Two Basic Types of P&L Statements

An accomplished senior business administrator, Yasser Josue Brenes has served as Area President- South Area, based out of Houston TX for Republic Services since March 2022. In this role, Yasser J. Brenes has prepared P&L statements for companies with more than $900 million in assets.

Short for profit and loss, P&L is one of several metrics that help identify the overall financial health of a company. Subtracting total company expenses from total company revenue to determine net profit or loss, officials generally generate P&L statements on an annual, quarterly, monthly, or weekly basis.

Finance and business professionals can create P&L statements using cash or accrual methods. The simplest of these two methods, the cash method, tabulates all monetary assets that have gone into or out of a company. Smaller businesses generally employ this method.

Although the accrual method is significantly more complicated than the cash method, it is ideal for companies that want to draw a more accurate picture of overall financial health moving forward. A record of revenue as it is earned and expenses as they are paid, an accrual P&L statement takes incoming payments into account that a company has not yet received as well as outgoing liabilities that it has not yet paid.

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