What does a Profit and Loss statement primarily report?

The Profit and Loss statement, also known as the P&L or income statement, primarily focuses on summarizing the revenues and expenses of a business over a specific period, ultimately showing the net profit or loss. By detailing how much the business has earned (from sales and other income sources) and spent (through costs such as goods sold and operating expenses), the P&L provides critical insights into the financial performance of the company.

This statement is essential for stakeholders including management, investors, and creditors to evaluate how well the business is managing its income and expenses. It plays a key role in decision-making by highlighting trends in revenue generation and expenditure, helping identify areas for improvement, and enabling strategic financial planning.

In contrast, the other options either focus on elements that are not part of regular P&L reporting or describe different financial documents or metrics. For example, reporting on assets and liabilities corresponds to the balance sheet, while focusing solely on business expenses and employee wages restricts the view to just part of the expenses without including income. Additionally, customer revenues and satisfaction pertain more to sales performance and customer relations than to the financial overview provided by the Profit and Loss statement.