From the following information of Dholakia Ltd., prepare a Comparative Statement of Profit and Loss for the year ended 31st March, 2024 and 2025 : | Particulars | Note No. | 2024 – 25 | 2023 – 24 | | --- | --- | --- | --- | | Revenue from operations | | ₹ 30,00,000 | ₹ 15,00,000 | | Cost of revenue from operations | | 80% of revenue from operations | 80% of revenue from operations | | Other Expenses | | ₹ 2,40,000 | ₹ 1,20,000 | | Tax Rate | | 50% | 50% |

From the following information of Dholakia Ltd., prepare a Comparative Statement of Profit and Loss for the ye

Question

From the following information of Dholakia Ltd., prepare a Comparative Statement of Profit and Loss for the year ended 31st March, 2024 and 2025 :

Particulars	2024 – 25	2023 – 24
Revenue from operations	₹ 30,00,000	₹ 15,00,000
Cost of revenue from operations	80% of revenue from operations	80% of revenue from operations
Other Expenses	₹ 2,40,000	₹ 1,20,000
Tax Rate	50%	50%

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Concept understanding — Profit Before Tax

Profit Before Tax (PBT) – A First Look

Think of a business like a small shop you run. At the end of the year, you add up all the money you earned from selling goods (revenue) and subtract all the money you spent on buying stock, paying rent, electricity, and salaries. What remains is your profit — the reward for your effort.

But here's the catch: before you can take that profit home, the government wants its share — income tax. So the profit you calculate before paying tax is called Profit Before Tax (PBT). After you pay tax, what's left is Profit After Tax (PAT) — the amount you can actually keep or reinvest.

Precise Meaning (as per NCERT Class 12 Accountancy)

In the context of a company's financial statements, Profit Before Tax is the net profit earned by the company from its operations and other activities before deducting the provision for income tax.

It appears in the Statement of Profit and Loss (the new name for the Profit & Loss Account under Companies Act, 2013). The format is:

Profit Before Tax = Revenue from Operations + Other Income - Total Expenses (excluding tax)

Where total expenses include:

Cost of materials consumed / purchases
Changes in inventories
Employee benefit expenses
Depreciation and amortisation
Finance costs (interest)
Other expenses (rent, repairs, etc.)

Why Does PBT Matter?

It shows operating efficiency – PBT tells you how well the business is doing before the taxman's cut. A company with high PBT but low PAT might be paying heavy taxes (or has deferred tax issues).
It's used for comparisons – Different companies may face different tax rates (e.g., new manufacturing units get tax holidays). Comparing PBT (instead of PAT) gives a fairer picture of their core performance.
It's the base for tax calculation – The company estimates its tax liability on PBT and creates a provision.

Accounting Treatment – Which Account is Debited/Credited?

In the Statement of Profit and Loss, the treatment is straightforward:

Debit side (expenses): All expenses are debited.
Credit side (incomes): All revenues and gains are credited.
The balancing figure after all items (except tax) is Profit Before Tax – shown on the credit side.
Then, Less: Provision for Tax is shown as a deduction from PBT to arrive at Profit After Tax.

Journal entry for creating tax provision:

Particulars	Debit (₹)	Credit (₹)
Profit & Loss A/c (or Statement of P&L) Dr.	XXX
To Provision for Tax A/c		XXX
(Being provision for income tax created)

Debit: Profit & Loss (Statement of P&L) – reduces the profit.
Credit: Provision for Tax – a current liability shown in the Balance Sheet.

When tax is actually paid later:

Particulars	Debit (₹)	Credit (₹)
Provision for Tax A/c Dr.	XXX
To Bank A/c		XXX
(Being tax paid)

Format of Statement of Profit and Loss (as per NCERT – Part I of Schedule III)

Below is the relevant portion showing how PBT appears. Note: This is a simplified extract.

Particulars	Note No.	Amount (₹)
I. Revenue from Operations		10,00,000
II. Other Income		50,000
III. Total Revenue (I + II)		10,50,000
IV. Expenses:

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A Comparative Statement of Profit and Loss is a financial analysis tool that presents the income statement data for two or more accounting periods side-by-side. Its purpose is to highlight trends, growth, or decline in various revenue and expense items, allowing for an easy assessment of the company's financial performance over time. By showing both absolute and percentage changes, it helps stakeholders understand the magnitude and significance of these changes.

Here is the Comparative Statement of Profit and Loss for Dholakia Ltd.:

Comparative Statement of Profit and Loss

for the years ended 31st March, 2024 and 2025

Particulars	2023-24 (Previous Year) (₹)	2024-25 (Current Year) (₹)	Absolute Change (Increase/Decrease) (₹)	Percentage Change (%)
1. Revenue from Operations	15,00,000	30,00,000	15,00,000	100.00
2. Less: Cost of Revenue from Operations	12,00,000	24,00,000	12,00,000	100.00
3. Gross Profit (1 - 2)	3,00,000	6,00,000	3,00,000	100.00
4. Less: Other Expenses	1,20,000	2,40,000	1,20,000	100.00
5. Profit Before Tax (3 - 4)	1,80,000	3,60,000	1,80,000	100.00
6. Less: Tax Expense (50% of 5)	90,000	1,80,000	90,000	100.00

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This solution prepares a Comparative Statement of Profit and Loss for Dholakia Ltd. for the years ended 31st March 2024 and 2025, showing an overall 100% increase in all revenue and expense items, leading to a 100% increase in Profit After Tax from ₹90,000 to ₹1,80,000.

A Comparative Statement of Profit and Loss is a financial analysis tool that presents the income statement data for two or more periods side-by-side. Its primary purpose is to highlight changes in financial performance over time, both in absolute amounts and in percentages. This allows stakeholders to easily identify trends, assess growth, and understand the magnitude of changes in revenue, expenses, and profitability.

The statement is prepared by listing each line item of the Profit and Loss account for the current year and the previous year. Then, the absolute change (increase or decrease) for each item is calculated by subtracting the previous year's figure from the current year's figure. Finally, the percentage change is determined by dividing the absolute change by the previous year's figure and multiplying by 100.

The core concept here is to analyze the Profit Before Tax and Profit After Tax by systematically comparing the components that lead to them. By comparing these figures, management can evaluate the effectiveness of their strategies, identify areas of concern (e.g., disproportionate increase in expenses), and make informed decisions.

The structure typically follows the format prescribed by Schedule III of the Companies Act, 2013, for a Statement of Profit and Loss, with additional columns for comparative analysis.

Comparative Statement of Profit and Loss

For the years ended 31st March, 2024 and 2025

Particulars	Note No.	2023-24 (₹)	2024-25 (₹)	Absolute Change (₹)	Percentage Change (%)
I. Revenue from Operations		15,00,000	30,00,000	15,00,000	100.00
II. Less: Expenses
Cost of Revenue from Operations	(1)	12,00,000	24,00,000	12,00,000	100.00
Other Expenses		1,20,000	2,40,000	1,20,000	100.00
Total Expenses		13,20,000	26,40,000	13,20,000	100.00
III. Profit Before Tax (I - II)	(2)	1,80,000	3,60,000	1,80,000	100.00
IV. Less: Tax Expense	(3)	90,000	1,80,000	90,000	100.00
V. Profit After Tax (III - IV)	(4)	90,000	1,80,000	90,000	100.00

Working Notes

1. Calculation of Cost of Revenue from Operations

For 2023-24:
- Revenue from Operations = ₹15,00,000
- Cost of Revenue from Operations = 80% of ₹15,00,000 = ₹12,00,000
For 2024-25:
- Revenue from Operations = ₹30,00,000
- Cost of Revenue from Operations = 80% of ₹30,00,000 = ₹24,00,000

2. Calculation of Profit Before Tax

For 2023-24:
- Revenue from Operations = ₹15,00,000
- Less: Cost of Revenue from Operations = ₹12,00,000
- Less: Other Expenses = ₹1,20,000
- Profit Before Tax = ₹15,00,000 - ₹12,00,000 - ₹1,20,000 = ₹1,80,000
For 2024-25:
- Revenue from Operations = ₹30,00,000
- Less: Cost of Revenue from Operations = ₹24,00,000
- Less: Other Expenses = ₹2,40,000
- Profit Before Tax = ₹30,00,000 - ₹24,00,000 - ₹2,40,000 = ₹3,60,000

3. Calculation of Tax Expense

Tax Rate = 50%
For 2023-24:
- Profit Before Tax = ₹1,80,000
- Tax Expense = 50% of ₹1,80,000 = ₹90,000
For 2024-25:
- Profit Before Tax = ₹3,60,000
- Tax Expense = 50% of ₹3,60,000 = ₹1,80,000

4. Calculation of Profit After Tax

For 2023-24:
- Profit Before Tax = ₹1,80,000
- Less: Tax Expense = ₹90,000
- Profit After Tax = ₹1,80,000 - ₹90,000 = ₹90,000
For 2024-25:
- Profit Before Tax = ₹3,60,000
- Less: Tax Expense = ₹1,80,000
- Profit After Tax = ₹3,60,000 - ₹1,80,000 = ₹1,80,000

5. Calculation of Absolute Change

Absolute Change = Current Year's Amount - Previous Year's Amount …

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Comparative Statement of Profit and Loss

Working Notes

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