The purpose of the profit and loss account is to give you an idea about whether a company has made a profit or loss more than a financial year. An income and loss account begins with the trading account and then takes into account all the other outcome associated with the company.
It's neither. The suspense account is a balance used to force the trial balance to agree. Once the errors have been located the respective amounts are debited or credited out of the suspense account until the balance is zero.
The profit and loss account is named as such because it summarizes a company's financial performance over a specific period, showing both the profits earned and the losses incurred. The account reflects the net result of all revenues and expenses, indicating whether the company has made a profit or suffered a loss. Using "profit and loss" in the account's title emphasizes the importance of considering both aspects of a company's financial outcomes in a comprehensive manner.
"What are the limitations of profit and loss account?"
Profit and loss accont is used to calculate the profit or loss of business while profit and loss appropriation account is used to allocate or distribute net income or loss to share holders or different reserves account.
Income and expense for not for profit organisations is same as profit and loss account but they cannot use the name profit and loss account because not for profit organisations are not formed to earn profit.
: Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period, Profit and loss account gives the actual information about indirect expenses, Profit and loss account serves to show the ratio between net profit to sales, Profit and loss account helps in showing the ratio between net profit to operating expenses, Profit and loss account helps in controlling indirect expenses
Debit balance of Profit & Loss Account represents "Loss"
details of profit and loss appropriation account Profit and loss appropriation account is prepared after profit and loss account..It s a account where the profits earned by the company is brought in from profit and loss accont and it s distributed to various accounts like interim divident account, provision for taxiation account, general reserve account etc.....it s a account which shows how the profits are distributed in an organisation.....
profit & loss appropriation accounts are prepared after profits. Basic purpose is to show how the profits are distributed.NOT only profits but also concerned losses.
Yes. Profit and loss account is a nominal account and also trading a/c to be prepared at the end of the year.
In profit and loss account normally list all in the revenues and expenses and profit or loss for any particular fiscal year of company.