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It provides information about net profit or net loss earned or incurred by the business during a particular period.
Accounting data for determining efficiency:
Net results provided by the Profit and Loss Account can be compared with the net results of the previous years and the efficiency of the business can be determined by such inter-period comparison of results.
Control over expenses:
Profit and Loss Account provides information about various kinds of expenses. The expenses of the current year can be compared with the expenses of the previous year and effective steps can be taken for the control of expenses, where it becomes necessary.
Future Profit Planning:
Net profit of various years can be taken as basis for future profit-planning. It helps the business in the allocation of sources and future expansion.
What else can I help you with?
how does income and expenses account difference from 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.
What is the difference between profit and loss account and profit and loss appropiation 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.
What is the importance of profit and trading and loss account?
It helps a company control their inflows and outflows. This will help them make a decision about if they are making a profit or loss over a period usually 12 months
Is profit and loss account is a nominal account?
Yes. Profit and loss account is a nominal account and also trading a/c to be prepared at the end of the year.
Why is depreciation is charged on profit and loss account?
Depreciation is the allocation of the portion of assets value to fiscal year in which it is used it is charged to profit and loss account because it is that portion of asset value which is expensed and expenses are shown in profit and loss account.
What are the limitations of profit and loss account?
"What are the limitations of profit and loss account?"
Why profit and loss account is called as profit and loss account and why not profit or loss account?
The profit and loss account is named as such because it summarizes a company's financial performance over a specific period, showing both the profits earned and the losses incurred. The account reflects the net result of all revenues and expenses, indicating whether the company has made a profit or suffered a loss. Using "profit and loss" in the account's title emphasizes the importance of considering both aspects of a company's financial outcomes in a comprehensive manner.
how does income and expenses account difference from 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.
What is the difference between profit and loss account and profit and loss appropiation 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.
What is debit balance of profit and loss account?
Debit balance of Profit & Loss Account represents "Loss"
Advantages and disadvantages of trading profit and loss account?
: 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
What is the importance of profit and trading and loss account?
It helps a company control their inflows and outflows. This will help them make a decision about if they are making a profit or loss over a period usually 12 months
Profit and loss appropriation account uses meaning?
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.....
Is profit and loss account is a nominal account?
Yes. Profit and loss account is a nominal account and also trading a/c to be prepared at the end of the year.
About projected balance sheet and profit and loss account?
how to prepare the forecast report of profit and loss account with balancesheet
What would you find on a profit and loss account?
In profit and loss account normally list all in the revenues and expenses and profit or loss for any particular fiscal year of company.
Which account you in 3 net loss?
The profit and loss account is the account that can be used to calculate the net loss.
