Question

Why is Profit and loss Adjustment Account Prepare​

Answer 1

$\underline{\underline{\sf{Answer}}}$

⟹Determination of Funds from operation by adjusted profit & loss account.

⟹ An adjusted P/L account is prepared by debiting all the non-cash expenses, non-operating losses and non-operation expenses with net profit whereas, all the non-operation revenues, gain, and incomes are credited to an adjusted P/L account.

Answer 2

Answer:

Such errors may be disiclosed after the prepartion of final accounts, thus profit and loss adjustment account is prepared to rectify such errors in the subsequent accounting period without affecting the older profit and loss account.