Question

why is profit and loss adjustment account prepared​

Answer 1

The Profit and Loss Adjustment Account is prepared because of the following two reasons. ... In this situation, this account acts as a substitute for Profit and Loss Appropriation Account. The main rationale to prepare the Profit and Loss Adjustment Account is to ascertain true profit or loss.

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Answer 2

Answer:

➡️An adjusted P/L account is prepared by debiting all the non-cash expenses, non-operating losses and non-operation expenses with net profit. When net profit or loss is not given, P/L appropriation account or Retained earnings or Reserve and surplus or Reserve fund, whichever is given, is used.

➡️The Profit and Loss Adjustment Account is prepared because of the following two reasons:-

◾️In this situation, this account acts as a substitute for Profit and Loss Appropriation Account.

◾️The main rationale to prepare the Profit and Loss Adjustment Account is to ascertain true profit or loss.

Explanation:

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