Question

Consider the following statements.

Statement 1 - "Profit and loss account shows the operating performance of an enterprise for a period of time".

Statement 2 - "The Profit and loss account describes the different business activities such as revenues and expenses".

Options

• Only statement 1 is correct

• Only statement 2 is correct

• Both the statement is correct

• None of these

Answer 1

Both the statement is correct.

Explanation:

It assists a businessman in evaluating an enterprise's success and gives a foundation for anticipating future performance. The profit and loss account describes various business operations such as revenues and expenses and is particularly important in measuring the risk of failing to achieve a given level of income in the future.