What is Profit & Loss Account?

                                 What is Profit and Loss Account ? 

The Profit and Loss Account starts with the credit from the Trading Account in respect of Gross Profit or Debit if there is Gross Loss. Thereafter, all those expenses, which have not been debited to trading account, arc debited to profit and loss account. If there are any incomes or gains, for e.g. rent received on premises sublet, interest on investments, discount received from suppliers, these will be credited to Profit and Loss Account.
                                   Format of Profit and Loss Account (For the year ending on----)

Particular

Amount

Particular

Amount

To Gross Loss b/d
To Salaries & Wages
To Salaries to Proprietor/ Partners'/ Directors'
To Bonus
To Rent, Rates & Taxes To Freight & cartage outward
To Electricity Exp.
To Repair & Maintenance
To Insurance Premium To Staff Welfare exp.
To Pension & Gratuity
To Compensation to workmen

To Audit Fees
To Printing & Stationery
To Postage, Telegram & Telephone
To Commission, Brokerage & Discount To Travelling Exp.

To Conveyance Exp.
To Entertainment Exp.
To Sales promotion Exp.
To Advertising & Publicity (including free sample distribution)
To discount allowed
To Bad Debts
To Interest
To Bank Charges
To Legal Charges
To General Exp.
To Packing Expenses
To Motor Car Expenses.
 To Depreciation:
On Building                                    *****
On Plant & machinery                 *****
On Furniture & Fixture etc         *****
To Loss on sale of fixed assets
To Loss on sale of investment
To Abnormal loss:
Loss by theft
Loss by fire
Loss by Embezzlement
To Provision for Doubtful Debts
To Provision for Taxation
To Net Profit trd. to Capital A/c
Total

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By Gross Profit b/d
By Profit on Sale of fixed assets
By Profit on Sale of investment
By Interest

By Dividend
By Commission
By Discount
By Rent
By Sale of Scraps .
By Miscellaneous Income

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