Book-Keeping and Accountancy · Ch 9 — Final Accounts of a Proprietary Concern
The Profit and Loss Account — Meaning and Format
The Profit and Loss Account — Meaning and Format
The Profit and Loss Account is the second part of Final Accounts. Starting from the Gross Profit (or Gross Loss) brought down from the Trading Account, it brings in every other business expense (all the indirect, office, administrative, selling and distribution, and financial expenses) and every other business income (commission received, interest received, discount received, and similar) to arrive at the final figure every business exists to know: Net Profit or Net Loss.
Format of the Profit and Loss Account:
| Dr. Profit and Loss Account for the year ended 31st March ... | Amount (₹) | Cr. | Amount (₹) |
|---|---|---|---|
| To Gross Loss b/d (if any) | XXX | By Gross Profit b/d | XXX |
| To Salaries | XXX | By Rent Received | XXX |
| To Rent, Rates and Taxes | XXX | By Commission Received | XXX |
| To Printing and Stationery | XXX | By Interest Received | XXX |
| To Postage and Telegrams | XXX | By Discount Received | XXX |
| To Insurance Premium | XXX | By Dividend Received | XXX |
| To Advertisement | XXX | By Miscellaneous Income | XXX |
| To Carriage Outward / Selling Expenses | XXX | ||
| To Discount Allowed | XXX | ||
| To Bad Debts | XXX | ||
| To Depreciation | XXX | ||
| To Interest on Loan Paid | XXX | ||
| To Net Profit (transferred to Capital A/c) | XXX | ||
| Total | XXX | Total | XXX |
(As with the Trading Account, if the credit side total exceeds the debit side total, the balancing figure is a Net Loss, shown on the credit side as "By Net Loss transferred to Capital A/c".) …
The final surplus (or deficit) after Gross Profit (from the Trading Account) is adjusted for all other business incomes and all indirect/administrative/selling/financial expenses; transferred t …
Business expenses that are not part of bringing goods to a saleable state — office/administrative, selling/distribution, and financial expenses (salaries, rent, advertisement, discount allowed, interest, depreciation) — …