Yes. Profit and loss account is a nominal account and also trading a/c to be prepared at the end of the year.
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.
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.
Prepaid expenses are the part of nominal account expenses which are not used during the current accounting period. They cannot be charged to profit and loss account as per matching concept. They find place in balance sheet and written off in the next accounting period.
A trading account is considered a nominal account. It is used to record the revenues and expenses related to trading activities, such as sales and cost of goods sold, which ultimately affect the profit or loss of a business. Unlike real accounts, which pertain to assets, liabilities, and equity, nominal accounts are temporary and are closed at the end of an accounting period.
no sales is not a nominal account. because nominal account says" debit all expenses and credit all income and gain account. " all things which are tangible is call real account. u can touch the goods which are going to sale. Sale is nominal account as sale generally have some element of profit. This is the good reason to treat the sale as nominal account.
"What are the limitations of profit and loss 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.
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.
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
Prepaid expenses are the part of nominal account expenses which are not used during the current accounting period. They cannot be charged to profit and loss account as per matching concept. They find place in balance sheet and written off in the next accounting period.
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.....
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.
no sales is not a nominal account. because nominal account says" debit all expenses and credit all income and gain account. " all things which are tangible is call real account. u can touch the goods which are going to sale. Sale is nominal account as sale generally have some element of profit. This is the good reason to treat the sale as nominal account.
They do not reflect in the profit loss account at all.