Question

What are the components of income statement?

Options

• Trading account

• Profit and loss account 

• Profit and loss appropriation account

• All of these

Answer 1

All of these.

Explanation:

The income statement is divided into three components:

• the trading account, which shows the gross profit earned,
• the profit and loss account, which shows the net profit earned or net loss incurred, and
• the profit and loss appropriation account, which shows all appropriations from the current year and the balance of profit or loss from the previous year, as well as the surplus or deficit at the end of the period.