what is the meaning of profit and loss account
Answer Posted / suhail bashir
The account through which annual net profit or loss of a business is ascertained, is called profit and loss account. Gross profit or loss of a business is ascertained through trading account and net profit is determined by deducting all indirect expenses (business operating expenses) from the gross profit through profit and loss account. Thus profit and loss account starts with the result provided by trading account.
The particulars required for the preparation of profit and loss account are available from the trial balance. Only indirect expenses and indirect revenues are considered in it. This account starts from the result of trading account (gross profit or gross loss). Gross profit is shown on the credit side of the profit and loss account and gross loss is shown on the debit side of this account. All indirect expenses are transferred on the debit side of this account and all indirect revenues on credit side. If the total of the credit side exceeds the debit side, the result is "net profit" and if the total of the debit side exceeds the total of the credit side, the result is net loss. As the net profit or net loss of a certain accounting period is determined through profit and loss account.
Is This Answer Correct ? | 1 Yes | 0 No |
Post New Answer View All Answers
while preparing insolvency account deficiency account is wich account? why we do not prepare it with general rules?
When you prepare Profit and loss A/C either you will get profit or loss but not both.Then why we are saying it as profit AND loss A/C,why cannot we say it is as Profit OR loss account?
What are the basic assumptions in accounting?
What is the tds effect in balance sheet if tds receipts?
Tell me whether the account “cash” will be credited or debited, when a company pays a bill?
ram paid to cheque rs 25000/- for comission what is the entry in tally can in this entry tds will deduct then what is the entry in tally and which voucher
what are the different methods of teaching share and debenture to pre degree students
Tell me what is project implementation?
Tell me how can you explain the basic accounting equation?
What is an interest rate swap
Unrealised profit will be debited to ?
salary and rent entry with tds deduct
sir, i want t know, i got a cheque frm sindhu (that amount i gave her as rent advance, she is returning nw) bt the cheque has cancled and bank take cheque return charges so plz give this journal entries.
explain circumstances under which dissolution of solvent and insolvent partners are applicable using garners v/s murray rule
WHY U HAVE CHOOSE ICWA WHY NOT CA