Name: Norlailah M.

Amanollah
Year Level: BSA – I
Subject and Section: BMATH1 - B

Differentiate Profit, Loss, and Break-even

A profit is a financial gain of a business, specifically the amount of money earned minus
the amount spent in buying, operating, and producing products or providing services to the
customers, and loss is a decrease in a business resources or assets, basically the business
spent more than what did it earned. Whilst, the break-even is having an equal amount of what is
earned and spent by the business.

In order for the business to determine the profit and loss, there is what we called Profit
and Loss Statement or shortened for P&L and is also called income statement. It is a record of
revenue(earned) and expenses(spent) incurred by a business in a given period of time. The
Profit and Loss Statement shows the how much money that a business earned and lost within a
period of time, it answers whether the business is profitable or not. And there is also what we
called a Break-even Point, where the total revenue is equal to the total amount of expenses. In
other words, the Break-even Point is a level where the business neither makes profit nor loss.
This proves that the business is bringing in the same amount of money it needs to cover all of
the expenses and run the business. Typically, the first time a business reach a break-even point
means a positive turn. When a business break-even, it is finally making enough profit to cover
its operating costs.

However, once the business's revenue is below the break-even point, the business have
a loss. But if the revenue is above the break-even point, the business have profit. The Break-
even Point is used to determine how much a business need to sell to cover costs or make a
profit.