Question

Select the most appropriate alternative from those given below and rewrite the statement.

To find out net profit or net loss of the business _________________ account is prepared.

Options

• trading

• capital

• current

• profit and loss

Answer 1

To find out net profit or net loss of the business, Profit & Loss Account is prepared.

Explanation: The trading account only discloses the gross profit earned/loss incurred. But, a businessman is more interested in knowing the overall profit or loss of the business. So, a Profit and loss Account is prepared to ascertain the net profit earned or net loss incurred at the end of the accounting period.