Question

Identify the account on the basis of the given information.

1. It contains items of both revenue and expense nature.
2. It is prepared to ascertain the overall financial position of a business.

Options

• Trading account

• Purchase account

• Balance sheet

• Profit and Loss account

Answer 1

Profit and Loss account

Explanation:

Profit & Loss account collects all indirect revenues and indirect expenses to determine net profit or loss; it therefore contains both revenue and expense items and indicates the business’s financial result for the period.