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why we use the term profit and loss account instead of
profit or loss account

Question Posted / satish


why we use the term profit and loss account instead of profit or loss account..

Answer / chalapathi rao govada

The main objective of preparing the profit and loss account
is to know what is our netprofit or loss for a given period.

So based on this logic some of us will under an impression
that why can call it as profit or loss account.

But my dear friend just have a look at the logic below.

In the profit and loss account we will record all the
profit transactins and loss transactions.
Eg: profit on sale of a Fixed Assets.
Eg: Profit on Sale of investments in Stock market.

Eg: loss on sale of a capital Asset.
Eg: loss on sale of any security.

And: indirect transacitons which will altemately represents
profit or losses.Like

Sales --------- Major income source.
All revenue items---- Represents the earning capacity of
your organisation
All exp ----------- Which plays vital role in profit and
loss.

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