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