we show indirect expenses on debit side and indirect income on credit side.
indirect expenses like salaries, Rent, carriage outward, staffwalefare expenses and other expneses and indirect income like commission received, discount received and others.
if credit side more that debit side it means Net profit and debit side more than credit side it means Net loss.
Tradition, and the need to call it something.
"What are the limitations of profit and loss account?"
Profit and loss accont is used to calculate the profit or loss of business while profit and loss appropriation account is used to allocate or distribute net income or loss to share holders or different reserves account.
Income and expense for not for profit organisations is same as profit and loss account but they cannot use the name profit and loss account because not for profit organisations are not formed to earn profit.
Debit balance of Profit & Loss Account represents "Loss"
: Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period, Profit and loss account gives the actual information about indirect expenses, Profit and loss account serves to show the ratio between net profit to sales, Profit and loss account helps in showing the ratio between net profit to operating expenses, Profit and loss account helps in controlling indirect expenses
details of profit and loss appropriation account Profit and loss appropriation account is prepared after profit and loss account..It s a account where the profits earned by the company is brought in from profit and loss accont and it s distributed to various accounts like interim divident account, provision for taxiation account, general reserve account etc.....it s a account which shows how the profits are distributed in an organisation.....
Yes. Profit and loss account is a nominal account and also trading a/c to be prepared at the end of the year.
how to prepare the forecast report of profit and loss account with balancesheet
In profit and loss account normally list all in the revenues and expenses and profit or loss for any particular fiscal year of company.
The profit and loss account is the account that can be used to calculate the net loss.
They do not reflect in the profit loss account at all.