Profit and Loss report
This article explains what a profit and loss (P&L) account is and where to find it in FreeAgent. It also explains how to use the ‘Comparative’ profit and loss view and how to filter the report so you see only the figures you need.
A profit and loss account is a summary of the history of your business's trading during a given period of time. It shows your business's income from sales, bank interest, and other income such as the grant income, less its expenses.
Expenses might be directly linked to your sales, such as buying goods to sell to your customers, or they might be more general administrative expenses, such as buying stationery or paying your accountant. The expenses are taken away from the income to give your business's profit for the year.
Your business’s profit won’t be the same as the balance in your business bank account, because there are likely to be non-cash items in the profit and loss account - for example, if your business hasn’t been paid for all of its sales.
Therefore, the sales figure in the profit and loss account reflects the invoices dated during that period of time, along with any other income received during the period that has been explained as ‘Sales’ but does not have a corresponding invoice. Money received from customers in respect of invoices reduces the trade debtors figure on the balance sheet and will not impact the P&L.
Costs are recorded when the costs are incurred. Therefore, when you create a bill, out-of-pocket expense or explain a bank transaction as a ‘Payment’ in FreeAgent, the cost will impact the P&L on the date of the bill, out-of-pocket expense or bank transaction.
What isn't included on the profit and loss account?
You won't find anything that your business owns or owes on the profit and loss account. These are called 'assets and liabilities' and are found on the balance sheet.
That’s another reason why your business’s bank balance isn't the same as profit. Cash in the bank would also be affected by non-profit and loss items, such as buying capital assets. Capital assets are pieces of equipment or furniture that will last your business more than about a year, and as they're something the business owns, they go on your balance sheet.
Where is the profit and loss account in FreeAgent?
Navigate to the ‘Accounting’ tab at the top of the screen and select ‘Reports’ from the drop-down menu.
In the ‘High Level’ section, choose ‘Profit & Loss’.
You can choose whether you want to view your profit and loss account for a specific month, quarter, year or compare two different periods using the tabs at the top of the report.
You can then select to view the relevant date range, the current accounting year so far or a custom date range from the 'Date range' drop-down menu.
How to use the Comparative profit and loss view
When you select the ‘Comparative’ tab on the Profit & Loss report, you can compare two different quarterly or annual reports side-by-side, or you can view a custom date range.
The ‘Difference’ column shows the financial difference between period 1 and period 2.
The ‘Percentage change’ column shows the financial difference as a percentage. The arrow indicates if the difference has increased (arrow pointing upwards) or decreased (arrow pointing downwards).
Viewing details on the profit or loss account
If you need to see the details of what makes up any of the figures on the profit and loss account, select the figure.
This will display a list of the transactions that it includes.
Viewing your profit and loss figures on your FreeAgent Overview screen
You can also see a brief snapshot, taken from the yearly profit and loss account, of your business's income and day-to-day running costs for the current year to date so far on your Overview screen.
Exporting your profit and loss account account
You can export the profit and loss report as either a CSV or PDF file. To do this, select ‘Export Report’ in the top-right of the screen and choose the appropriate format from the drop-down menu.