Profit and loss Account
Profit and loss Account: Trading Account is prepared to ascertain the gross profit or gross loss made by the trader for any given period. The next step in the preparation of financial Accounts is to prepare a profit and loss Account. The main object of the profit and loss Account is to know the net profit or net loss made by the business for a particular period. The Trading Account is closed by transferring the gross profit or gross loss to the profit and loss Account. Therefore the profit and loss Account starts with gross profit on the Credit side or with gross loss on the debit side as the case may be. The profit and loss Account is credited with the gains and incomes whether actually received or yet to be received relating to the business and belonging to the period such as discount received, commision received, intrest received, rent received etc. It is debited with all expenses ( whether paid or yet to be paid) incidental to carry on the business such as offi