English and French profit and loss accounts: what are the differences?

Article publié le : 17 May, 2023
profit and loss accounts

Are you planning to work with British companies or to set up subsidiaries abroad as part of your development? It will be essential for you to master the accounting and financial vocabulary in English and to know the main differences between French and British accounting.

The income statement, or profit and loss account, is an accounting indicator that reflects the financial activity of the company and makes it possible to determine whether the company generates a profit or runs at a loss. What are the main differences between the French and English profit and loss accounts? Bilis provides you with all you need to know about this subject.

Income statement: what is it?

In accounting, the profit and loss account is a financial indicator that summarises all the income and expenses of a company over a given period.

1. Definition of the income statement

More specifically, the profit and loss account is an official accounting document that lists the company’s income and expenditure over an accounting period.

The profit and loss account determines the net result of the company by balancing cash receipts and payments.

2. How is the profit and loss account calculated?

The profit and loss account consists of two main elements: income and expenses.

Income is the sum of sales made by the company (revenue), while expenses are the costs incurred on behalf of the company (purchases of goods or services).

The profit and loss account of a company is calculated by making a global summary of the expenses and income. The difference between expenses and income will determine whether the accounting period shows a profit or a loss. This will enable the company to determine whether it is in surplus (income greater than expenses) or deficit (expenses greater than income).

3. Breaking down the profit and loss account

The nature of the income and expenses included in the income statement is divided into three categories: operating results, financial result and extraordinary results. The final profit and loss account is calculated by adding these three results.

French vs. English profit and loss account

1. Income statement: terms used in English

In British accounting, the term “income statement” or “P&L statement” is used in the United States and “profit and loss account” in the United Kingdom to refer to the income statement. As in France, there are several possible presentations:

  • the simplified presentation (single step) presentation which highlights the overall result for the year,
  • and the detailed presentation (multiple-step) which differentiates between the result from operating activities and the result from non-operating activities.

2. French and English profit and loss accounts: what are the differences?

Unlike the French income statement, the UK profit and loss account presents expenses by destination and not by nature. For example, personnel costs are not shown as a separate line item, but are broken down into acquisition, production, marketing and administration costs. In contrast, depreciation is shown on a separate line or broken down by purpose.

The English profit and loss account distinguishes 3 main functions:

  • The “Purchase or Production” function includes the cost of goods sold (purchase of goods sold for a commercial enterprise and production cost of goods sold for an industrial enterprise). The difference between turnover and cost gives the “gross margin”.
  • The “Sales” function includes the costs of sales personnel, advertising and promotion costs as well as depreciation costs.
  • The “Administrative” function includes the costs of administrative staff, taxes, depreciation and other operating costs related to this function

Unlike the French system, which deducts discounts, rebates or refunds directly from the purchase and sales accounts, the British profit and loss account emphasises the operating result and highlights the commercial and financial reductions separately.

On the other hand, with the objective of expensing only those items that are directly related to the cost of goods sold, allowances for bad debts are recorded as a reduction of sales instead of being expensed.

In the United States, there are two types of taxes: a federal income tax and a state income tax. Income tax is calculated after the current result to determine the result net of tax.

3. Example of an English income statement

(Compte de résultat — Présentation détaillée)
N N-1
SALES (CHIFFRE D’AFFAIRES) 282,000 2250,000
Less: Sales discount
(Moins : réduc­tions sur ventes)
25,000) 24,000)
Less: Sales returns and allowances
(Moins : Retour sur ventes et pro­vi­sions pour dépré­cia­tion)
215,000) 2(12,500)
(Chiffre d’affaires net)
262,000 233,500
Inven­to­ries, January 1, N
(Stocks au 01-01-N)
24,000 20,000
167,000 150,000
Less: Purchase discounts
(Moins : Réductions sur achats)
(3,000) (5,400)
Less: Purchase returns and allowances
(Moins : Retours sur achats et pro­vi­sions pour dépré­cia­tion)
(8,000) (6,500)
Add: Transportation-in
(Plus : Transports sur achats)
10,000 15,000
Net cost of purchases
(Coût d’achat net)
166,000 153,100
Less: Inven­to­ries, December 31, N
(Stocks au 31-12-N)
(31,000) (35,000)
(Coût d’achat des mar­chan­dises vendues)
159,000 138,100
(Marge brute)
103,000 95,400
Research and development expenses
(Frais de R&D)
10,000 14,600
Selling expenses
(Frais com­mer­ciaux)
41,400 40,000
General and admi­nis­tra­tive expenses
(Frais généraux et administratifs)
24,300 21,600
(Charges d’exploitation)
75,700 76,200
(Résultat d’exploitation)
27,300 19,200
Interest and other income – net
(Résultat finan­cier)
(5,500) (4,900)
Federal income taxes (40%)
(Impôt sur les béné­fices)
(8,720) (5,720)
NET INCOME on ordinary activities of from continuing
(Résultat courant net)
13,080 8,580
Discontinuing operations – net of income tax effect
(Résultat des acti­vi­tés abandonnées — après impôt sur les béné­fices)
8,900 (2,000)
Extraordinary items — net of income tax effect
(Résultat extraordinaire — après impôt sur les béné­fices)
(5,400) 5,300
Cumulative effect of change in accoun­ting principle – net of income tax effect
(Incidence des chan­ge­ments dans les prin­cipes comp­tables — après impôt sur les béné­fices)
(1,100) (1,600)
(Résultat net)
15,480 10,280
Earning per share of common stock
(Bénéfice net par action ordinaire)
$ 0,26 $ 0,17

The profit and loss account is a table that summarises the company’s income and expenditure over an accounting period with the aim of determining the fiscal result. It is an accounting document that allows you to assess the performance of the company and its ability to make a profit. If you are going to be expanding internationally, it is a good idea to understand how the English profit and loss statement works and to consider having it translated, as the stakes are high. Need advice on the translation of your accounting and financial documents? Call on an expert to help you with your project.

Article rédigé par : BILIS