In order for small business owners to be able to know if their business is producing a net income or loss, they need to understand their profit & loss statement. There are important terms in helping to understand the profit & loss statement.

Revenue- Sales made by the business to your customers.
Cost of Goods Sold-The direct expense to produce the goods/services sold by the company. 
Gross Profit- The difference between sales and cost of goods sold.
Expenses-Costs incurred to run the day to day operations of the business.
Net Income (Loss)- Balance remaining after subtracting total expenses from revenues.
Cash Flow-The revenues or expenses expected to be generated through the business activities over a period of time.