Question

The reason of preparing Profit and Loss Account is ______.

Options

• Knowledge of Net Profit or Net Loss

• Provides information concerning gross profit

• Show Assets

• Show Liabilities

Answer 1

The reason of preparing Profit and Loss Account is knowledge of Net Profit or Net Loss.

Explanation:

The Profit & Loss Account summarizes revenues and expenses to determine net profit or loss. Gross profit comes from the Trading Account; assets and liabilities are shown in the Balance Sheet.