Question

Advantages of accounting to know the profit and loss of the company

Answer 1

The main advantages of profit andloss account are as follows:


1.Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period.


2. Profit and loss account gives the actual information about indirect expenses.


3. Profit and loss account serves to determine the ratio between net profit to sales.


4. Profit and loss account helps in determining the ratio between net profit to operating expenses.


5.Profit and loss account helps in controlling indirect expenses.

Answer 2

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