Profit & Loss Account
From EDeskWiki
The Profit and Loss account, displays the breakup of how the company's or firm's profit is reduced or consumed due to non-factory and non-production expenditure, like Office Overheads, Selling Overheads etc. It also records the non-production incomes, or miscellaneous income that arises.
It is prepared in sequence after the Trading Account, from which the Gross Profit is obtained, and accordingly reduced.
As per companies act all the companies are expected to produce financial statements each year. These statements appear in Company Reports.
1. The profit and loss account, and
Profit and loss (P&L) account This account can be updated regularly and shows how much profit or loss a business is making. A profit can be made in several ways, for example:
•From manufacturing, for example a company like ITI produces Telephone Units and other telephone materials. It buys in raw materials which are required to produce the telephone units
The top section of a P&L account is known as the trading account for a business that buys and sells items e.g. a Cement Shop. What is known as the gross profit is calculated by deducting cost of sales from turnover.
Profit / Loss account (Speculation)
The Profit and Loss account(Speculation), displays the breakup of the company's or firm's non-factory and non-production expenditures and incomes, which were marked/flagged by the user as projected entries.
This Profit and Loss Account(Speculation), is calculated after including all the projected entries and giving them the appropriate effect, so that the user can adjust the transaction entries accordingly.
