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प्रश्न
Explain the needs of Profit and Loss Account.
Discuss the need of Profit and Loss Account?
What is the need of the profit and loss account?
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उत्तर
The Profit and Loss Account is essential for the following reasons:
- Knowledge of Net Profit or Net Loss: This offers information on a company's profit or loss within a specific accounting period.
- Comparison with Profit of Previous Year: The Profit and Loss Account's net results can be compared to the profits of previous years, and this kind of inter-period performance comparison can be used to measure the business's efficiency.
- Control over Expenses: The profit and loss account provides information regarding different types of expenses. When required, effective expense control measures can be taken by comparing the current year's expenses with those of the preceding year.
- Future Profit Planning: You can use the net profit from different years as a starting point for your future profit planning. It supports the company's future growth and resource allocation.
Notes
Students should refer to the answer according to their questions.
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संबंधित प्रश्न
Answer in One Sentence:
State the meaning of Outstanding Expenses?
Select the most appropriate alternatives given below and rewrite the sentence :
Discount earned is transferred to credit side of ___________ account
Fill in the blank :
Interest on Bank Loan is debited to _________ A/c
Fill in the blank :
All indirect / operating expenses are transferred to ________ account.
Find the odd one :
What is the need for preparing profit and loss account?
Give a word, term, or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 |
| 2) | Interest (Cr.) | ₹ 16,000 |
| 3) | Sundry expenses | ₹ 42,000 |
| 4) | Insurance | ₹ 35,000 |
| 5) | Salaries | ₹ 40,000 |
| 6) | Rates and Taxes | ₹ 13,000 |
| 7) | Postage | ₹ 8,000 |
| 8) | Advertisement | ₹ 40,000 |
| 9) | Rent paid | ₹ 32,000 |
| 10) | Bad debts | ₹ 10,000 |
| 11) | Commission (Cr) | ₹ 17,500 |
| 12) | Printing & Stationery | ₹ 21,000 |
| 13) | Loss by fire | ₹ 18,000 |
| 14) | Discount (Dr) | ₹ 23,000 |
| 15) | Discount (Cr) | ₹ 37,000 |
| 16) | Misc. Income | ₹ 14,000 |
| 17) | Depreciation | ₹ 34,000 |
| 18) | Carriage Outwards | ₹ 60,000 |
| 19) | Godown Expenses | ₹ 40,000 |
Note: Gross Profit: ₹ 4,07,500
Abnormal Losses such as stock destroyed by fire, goods lost intransit, loss on sale of fixed assets are recorded on the ______ side of the ______.
Which of these expenses would typically NOT appear on the debit side of the Profit and Loss Account?
