Profit and loss statement (P&L)

A profit and loss statement, also called an income statement, summarizes revenue and expenses over a defined period. For a rental, it may show rent and other property income, then operating categories such as repairs, insurance, management, utilities, and taxes. The bottom line depends on which non-operating, financing, depreciation, and tax items the report includes, so the title and account detail should make the scope clear.

Build the statement from the classified general ledger after reconciling cash and reviewing period cutoffs. Compare the current month, year to date, budget, and prior period only when all columns use consistent accounting definitions. Separate ordinary operating expense from capital expenditure and owner activity rather than burying them in “miscellaneous.” A P&L may support an NOI calculation, but P&L net income and NOI are not automatically the same number.

Consider a duplex that reports $4,000 of rent, $350 of owner-paid utilities, $280 of routine repairs, and $700 of mortgage payments in one month. A management P&L may separate the mortgage into interest and principal or show financing below operations, while an NOI view excludes debt service entirely. If the owner compares $2,670 after the entire payment with another property's NOI, the apparent comparison mixes two definitions and can lead to a poor decision.

Red flags are large uncategorized balances, repair accounts that contain renovations, missing vacancy context, and reports generated before the bank or rent ledger is reconciled. Read material changes by opening the underlying transactions rather than inventing a narrative from one total. A management P&L helps explain operations; it is not by itself a tax return, appraisal, cash-flow statement, or measure of distributable cash.