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Profit and loss account is the account whereby a trader determines the net profit or loss of his business.
Balance of profit and loss account. Balance sheet Profit and loss account. The profit and loss account PL is a financial report that shows the revenue expenses and profit or loss of your company over a specific accounting period. I was not a CPA and did not have an MBA.
The PL statement shows a companys ability to generate sales manage expenses and create profits. A balance sheet is used to give the company a pictorial view of its financial health to know where it stands. It is an account.
A profit and loss statement PL or income statement or statement of operations is a financial report that provides a summary of a companys revenues expenses and profitslosses over a given period of time. Never taken a budgeting or balance sheet course. Unlike the profit and loss account a balance sheet.
The Profit and Loss Account must already have been credited with the gross profit as disclosed by the Trading Account. It is a statement. Of the accounting year the balance in the abnormal gains account will be carried to profit and Loss Account Calculation of value of abnormal gain.
Without the preparation of these two entities the financial statement cannot be reported even the readers of the statement are not able to clearly understand the companys position. Credit the Profit and Loss Account. Hence due regard is to be given by every company in the preparation of the two.
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