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Questions
Answer in One Sentence:
What do you mean by Profit & Loss A/c?
What is a Profit and Loss Account?
Solution
- A part of the final account prepared by the business concern on the basis of indirect expenses and indirect incomes to ascertain net profit or net loss of the business is called Profit and Loss Account.
- This is also a nominal account, representing the second stage.
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RELATED QUESTIONS
Answer in One Sentence:
What is Net Profit?
Give a word, term, or phrase which can substitute the following statement:
Expenses paid before it is due.
Give a word, term, or phrase which can substitute the following statement:
An amount spent on promoting sale of goods.
Excess of credit over to debit in Profit and Loss Account indicates ________
State True or False with reasons :
Income due but not received is a liability.
Fill in the blank :
Interest on Bank Loan is debited to _________ A/c
Fill in the blank :
All indirect / operating expenses are transferred to ________ account.
Fill in the blank :
An excess of debit over credit in the Profit & Loss A/c represents the __________.
Salaries appearing in the trial balance is shown on the ______.
What is the need for preparing profit and loss account?
From the following information, prepare profit and loss account for the year ending 31st December, 2016.
| Particulars | ₹ | Particulars | ₹ |
| Gross loss | 60,000 | Printing and stationery (office) | 2,000 |
| Promotional expenses | 5,000 | Legal charges | 5,000 |
| Distribution expenses | 15,000 | Bad debts | 1,000 |
| Commission paid | 7,000 | Depreciation | 2,000 |
| Interest on loan paid | 5,000 | Rent received | 4,000 |
| Packing charges (on sales) | 4,000 | Loss by fire not covered by insurance | 3,000 |
| Dividend received | 3,000 |
Correct and Rewrite the following statements:
When the credit side of the Profit and Loss Account is greater than the debit side, it is called Net Loss.
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 |
| 2) | Interest (Cr.) | ₹ 16,000 |
| 3) | Sundry expenses | ₹ 42,000 |
| 4) | Insurance | ₹ 35,000 |
| 5) | Salaries | ₹ 40,000 |
| 6) | Rates and Taxes | ₹ 13,000 |
| 7) | Postage | ₹ 8,000 |
| 8) | Advertisement | ₹ 40,000 |
| 9) | Rent paid | ₹ 32,000 |
| 10) | Bad debts | ₹ 10,000 |
| 11) | Commission | ₹ 17,500 |
| 12) | Printing & Stationery | ₹ 21,000 |
| 13) | Loss by fire | ₹ 18,000 |
| 14) | Discount (Dr) | ₹ 23,000 |
| 15) | Discount (Cr) | ₹ 37,000 |
| 16) | Misc. Income | ₹ 14,000 |
| 17) | Depreciation | ₹ 34,000 |
| 18) | Carriage Outwards | ₹ 60,000 |
| 19) | Godown Expenses | ₹ 40,000 |
| Note: Gross Profit | ₹ 4,07,500 | |
Give a word, term or phrase that can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | 22,000 |
| 2) | Interest (Cr.) | 16,000 |
| 3) | Sundry expenses | 42,000 |
| 4) | Insurance | 35,000 |
| 5) | Salaries | 40,000 |
| 6) | Rates and Taxes | 13,000 |
| 7) | Postage | 8,000 |
| 8) | Advertisement | 40,000 |
| 9) | Rent paid | 32,000 |
| 10) | Bad debts | 10,000 |
| 11) | Commission (Cr) | 17,500 |
| 12) | Printing & Stationery | 21,000 |
| 13) | Loss by fire | 18,000 |
| 14) | Discount (Dr) | 23,000 |
| 15) | Discount (Cr) | 37,000 |
| 16) | Misc. Income | 14,000 |
| 17) | Depreciation | 34,000 |
| 18) | Carriage Outwards | 60,000 |
| 19) | Godown Expenses | 40,000 |
Note: Gross Profit ₹ 407500
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 | |
| 2) | Interest (Cr.) | ₹ 16,000 | |
| 3) | Sundry expenses | ₹ 42,000 | |
| 4) | Insurance | ₹ 35,000 | |
| 5) | Salaries | ₹ 40,000 | |
| 6) | Rates and Taxes | ₹ 13,000 | |
| 7) | Postage | ₹ 8,000 | |
| 8) | Advertisement | ₹ 40,000 | |
| 9) | Rent paid | ₹ 32,000 | |
| 10) | Bad debts | ₹ 10,000 | |
| 11) | Commission (Cr) | ₹ 17,500 | |
| 12) | Printing & Stationery | ₹ 21,000 | |
| 13) | Loss by fire | ₹ 18,000 | |
| 14) | Discount (Dr) | ₹ 23,000 | |
| 15) | Discount (Cr) | ₹ 37,000 | |
| 16) | Misc. Income | ₹ 14,000 | |
| 17) | Depreciation | ₹ 34,000 | |
| 18) | Carriage Outwards | ₹ 60,000 | |
| 19) | Godown Expenses | ₹ 40,000 | |
Note: Gross Profit ₹ 4,07,500
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 |
| 2) | Interest (Cr.) | ₹ 16,000 |
| 3) | Sundry expenses | ₹ 42,000 |
| 4) | Insurance | ₹ 35,000 |
| 5) | Salaries | ₹ 40,000 |
| 6) | Rates and Taxes | ₹ 13,000 |
| 7) | Postage | ₹ 8,000 |
| 8) | Advertisement | ₹ 40,000 |
| 9) | Rent paid | ₹ 32,000 |
| 10) | Bad debts | ₹ 10,000 |
| 11) | Commission (Cr) | ₹ 17,500 |
| 12) | Printing & Stationery | ₹ 21,000 |
| 13) | Loss by fire | ₹ 18,000 |
| 14) | Discount (Dr) | ₹ 23,000 |
| 15) | Discount (Cr) | ₹ 37,000 |
| 16) | Misc. Income | ₹ 14,000 |
| 17) | Depreciation | ₹ 34,000 |
| 18) | Carriage Outwards | ₹ 60,000 |
| 19) | Godown Expenses | ₹ 40,000 |
Note: Gross Profit ₹ 407500
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 |
| 2) | Interest (Cr.) | ₹ 16,000 |
| 3) | Sundry expenses | ₹ 42,000 |
| 4) | Insurance | ₹ 35,000 |
| 5) | Salaries | ₹ 40,000 |
| 6) | Rates and Taxes | ₹ 13,000 |
| 7) | Postage | ₹ 8,000 |
| 8) | Advertisement | ₹ 40,000 |
| 9) | Rent paid | ₹ 32,000 |
| 10) | Bad debts | ₹ 10,000 |
| 11) | Commission (Cr) | ₹ 17,500 |
| 12) | Printing & Stationery | ₹ 21,000 |
| 13) | Loss by fire | ₹ 18,000 |
| 14) | Discount (Dr) | ₹ 23,000 |
| 15) | Discount (Cr) | ₹ 37,000 |
| 16) | Misc. Income | ₹ 14,000 |
| 17) | Depreciation | ₹ 34,000 |
| 18) | Carriage Outwards | ₹ 60,000 |
| 19) | Godown Expenses | ₹ 40,000 |
Note: Gross Profit: ₹ 4,07,500
Give a word, term or phrase which can substitute the following statement:
Account prepared to know Net Profit or Net Loss.
Imagine you are an accountant of Shah & Company. You have to pass an entry of interest received by the company. What will be the accounting treatment?
Prepare Profit and Loss Account of Sanjay Brothers for the year ended 31st March, 2018 from the following balances.
| 1) | Bank charges | ₹ 22,000 |
| 2) | Interest (Cr.) | ₹ 16,000 |
| 3) | Sundry expenses | ₹ 42,000 |
| 4) | Insurance | ₹ 35,000 |
| 5) | Salaries | ₹ 40,000 |
| 6) | Rates and Taxes | ₹ 13,000 |
| 7) | Postage | ₹ 8,000 |
| 8) | Advertisement | ₹ 40,000 |
| 9) | Rent paid | ₹ 32,000 |
| 10) | Bad debts | ₹ 10,000 |
| 11) | Commission (Cr.) | ₹ 17,500 |
| 12) | Printing & Stationery | ₹ 21,000 |
| 13) | Loss by fire | ₹ 18,000 |
| 14) | Discount (Dr.) | ₹ 23,000 |
| 15) | Discount (Cr.) | ₹ 37,000 |
| 16) | Misc. Income | ₹ 14,000 |
| 17) | Depreciation | ₹ 34,000 |
| 18) | Carriage Outwards | ₹ 60,000 |
| 19) | Godown Expenses | ₹ 40,000 |
Note: Gross Profit ₹ 4,07,500
It is an account prepared to know the net profit/loss. It is also a nominal account and represents second stage.
Office rent, office lighting, office salaries, insurance, postage and telegrams, stationery and printing, audit fees, legal expenses are recorded on the ______ side of the ______.
Storage expenses, carriage outwards, salaries of sales staff are recorded on the ______ side of the ______.
The difference of the two sides of this account is either net profit or net loss.
What is the purpose of a Profit and Loss Account?
Explain the needs of Profit and Loss Account.
