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Question
Distinguish between a Trading Account and a Profit and Loss Account.
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Solution
| S. No. | Basis of Distinction | Trading Account | Profit and Loss Account |
| 1. | Purpose | To ascertain the Gross Profit. | To ascertain the Net Profit. |
| 2. | Sequence | Prepared before the Profit and Loss Account. | Prepared after the Trading Account. |
| 3. | Main contents | Contains opening stock, closing stock, purchases and sales, wages, etc. | Contains Gross Profit, office expenses Salaries, insurance, discounts, etc. |
| 4. | Transfer of balance | Its balance is transferred to the Profit and Loss Account. | Its balance is transferred to the Balance Sheet. |
RELATED QUESTIONS
Answer in One Sentence:
What is Net Profit?
Give a word, term, or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Fill in the blank :
Interest on Bank Loan is debited to _________ A/c
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 ₹ 407500
Give a word, term or phrase which can substitute of the following statement:
Account prepared to know Net Profit or Net Loss.
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Net profit/loss is transferred from ______.
Which of the following is added to bad debts while preparing the Profit and Loss Account?
The “Packing expenses” are classified in the Profit and Loss Account when they are:
