Question

give any two needs of preparing profit and loss account ​

Answer 1

Explanation:

Profit & Loss Statement/Account shows the profits/losses earned/incurred by a business for a month or a year. Companies use Profit & Loss Statement and others use "T Account” for these below mentioned reasons.

Profit & Loss Statement/Account is prepared for two main reasons.

i. To know the profits/losses earned/incurred by a business,

ii. Statutory requirements (Companies Act, Partnership Act or any other law)

Traditionally, there were two steps to know the profit/loss. It meant, the preparation of :

a. Trading Account

b. Profit & Loss Account

Answer 2

Answer:

Advantages Of Profit And Loss Account

• To Obtain Net Result. Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period. ...
• To Know Total Expenses. Profit and loss account gives the actual information about indirect expenses.