Uses of the profit and loss account, Accounting Basics

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Uses of the Profit and Loss Account

1) The key utilize is to monitor and calculate profit. This suppose that the informat ion recording is correct. Significant harms can arise if the information is imprecise, either through lack of skill or deliberate fraud.

2) One time the profit (loss) has been precisely calculated, this can then be used for evaluation or judging how well the business is doing contrast to itself in the past, contrast to the managers' plans and compared to further businesses.

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