In This Chapter

In Chapter 2, we concentrated on the first group of accounts in the chart of accounts, which feed the balance sheet—that provides you with a good idea of the company’s net worth. In this chapter, we concentrate on the next group of accounts, which feed the profit and loss (P&L) statement—that helps you determine how much money you are making (good news) or losing (bad news—unless, of course, you want the loss to have a tax write-off) in a given period. You need the balance sheet to get loans. You need the P&L statement to help manage your daily business operations. This chapter lists the information you need in your chart of accounts in order to create an effective P&L statement.