Question

Characteristics of profit and loss account:

Answer 1

This account is prepared on the last day of an account year in order to determine the net result of the business. ... Only indirect expenses and indirect revenues are shown in this account. It starts with the closing balance of the trading account i.e. gross profit or gross loss.

Answer 2

Characteristics of profit and loss account :-

♥ It's second stage in the preparation of final accounts .

♥ It relates to particular accounting period and prepared at the end of that period .

♥ Basis of accounting is followed in preparation of this account .

♥ It is credited with gross profit and income from other sources , debited with indirect expenses and losses .

♥ It shows the financial performance of an enterprise .

♥ Balance of this account is net profit or loss .

♥ Net profit or loss directly affects the capital .