Advertisements
Advertisements
Question
What is the purpose of a Profit and Loss Account?
Advertisements
Solution
The Profit and Loss Account is essential for the following reasons:
- Understanding net profit or loss.
- Comparing it to the previous year’s profits.
- Control your expenses.
APPEARS IN
RELATED QUESTIONS
Give a word, term, or phrase which can substitute the following statement:
Carriage paid on sale of goods.
Give a word, term, or phrase which can substitute the following statement:
An amount spent on promoting sale of goods.
Fill in the blank :
Interest of proprietor's drawing is credited to _________ account.
Name any two direct expenses and indirect expenses.
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
______ provides information about the net profit earned or net loss suffered by the business during a given accounting period.
Storage expenses, carriage outwards, salaries of sales staff 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?
Which of the following is added to bad debts while preparing the Profit and Loss Account?
