Profit or loss account

The profit or loss account (peļņas vai zaudējumu aprēķins) is the part of the financial statements that shows the revenue and costs of an undertaking for the financial year and the profit made or loss incurred.

In Latvia it follows one of two layouts set by law: costs classified by nature (materials, staff costs, value adjustments) or by function (cost of sales, selling costs, administrative costs). Both start with net turnover.

The chosen layout may not change from the previous year except in justified cases explained in the notes. Revenue and costs are reported on the accruals principle, when they arise, not when cash is received or paid.

The "Profit or loss for the reporting year" line matches the balance sheet item of the same name. The distribution of profit appears in the next year statements.