BizGST Pro
The confusion worth clearing
Most owners can tell you what is in the bank and not what they earned, and treat the two as roughly the same. They are not — and that difference is the whole reason a P&L exists.
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Line one
Billed, not collected. An invoice you raised and have not been paid for is still revenue. This is the first place the statement parts company with your bank account.
Line two
Stock, materials, the freight to get it to you. Sell twice as much and you spend roughly twice as much here. If this line does not move with revenue, something is either unrecorded or genuinely changed.
Line three
Rent, salaries, electricity, professional fees. They do not care whether you sold anything this month, which is exactly what makes them the dangerous ones.
Line four
And it is not the money in your account, because some revenue is still owed to you and some expenses are still owed by you. Both statements are true at once.
In BizGST Pro
P&L (Cash) is built from invoices and expenses and answers what money moved. P&L (Accrual) is built from the journal and answers what you actually earned — the one that ties to the Balance Sheet.
What this does not tell you
That depends on rules that change and on facts specific to your registration. The GST portal, the Income Tax department and your accountant are the sources. What is above is bookkeeping, which is the same whatever the rules say.
BizGST Pro
GST invoicing, customer ledgers, stock and reports — built for Indian businesses.
bizgstpro.com