Profit and loss account, Accounting Standards

Loss and Profit Account is prepared so as to discern whether the firm has made net profit or suffered net loss for a specified accounting period. Such account deals along with indirect expenses as administrative, distribution and selling expenses and the similar to. Although profit and loss Account starts where trading account ends; conversely, it starts along with gross profit on the credit side brought forward from the trading account. In condition of gross loss brought forward from the trading account, loss and profit account begins along with gross loss as the first item upon the debit side.

All the running or indirect expenses, incurred on selling and distribution of the goods and the common administration of the business, such are listed on the debit side whereas all the items of income and gain are listed on the credit side. While the credit side as revenue exceeds the debit as expenses side, the dissimilarity is net profit. However, if the debit side exceeds the credit side, the diversity is net loss. Profit and loss account is balanced through transferring net profit to the capital accounts into the balance sheet and net profit thus raises the capital; the net loss is deducted from the capital accounts into the balance sheet and thus reduces the capital.

Posted Date: 4/3/2013 6:22:17 AM | Location : United States







Related Discussions:- Profit and loss account, Assignment Help, Ask Question on Profit and loss account, Get Answer, Expert's Help, Profit and loss account Discussions

Write discussion on Profit and loss account
Your posts are moderated
Related Questions

Standards at International Level: In view of the development of international trade and multinational enterprises, the requirement for standardization at the international level w

The balance sheet lists assets, capital and liabilities separately. This is an accepted convention about the assets and liabilities are demonstrated in sub groups and listed in the

International Accounting Standard Committee ( I. A. S.C. ) Defines inventories as Tangible property) a. Held for sale in the ordinary course of business. b. In the proces

Currently I can represent my financial position in the subsequent form:                                           Financial Position Statement 1     Amount owned by me

Need solution Corporate Financial Accounting Chapter 3 and Chapter 4: Complete PR 3-4A on page 137 using appropriate software. Complete EX 4-4 on page 187 using appropria

Current Liabilities We have studied about liabilities are claims of outsiders against the business. Conversely, these are amounts owed through the business to people who have

Prepare the Trading Account from the subsequent figures: Opening Stock 40,000 Power 6,000 Purchases 1,80,000

You have learned about the business and its proprietor is reacted as separate entities. It implies that separate accounts must be kept in the ledger for recording transactions amon

We have a demonstration instrument that was paid for years ago. How do we get it back on our books as an asset?