Profit and Loss Account
       It is an account prepared to ascertain 
       the net profit or net loss made by a 
       concern during an accounting period. 
         
           Profit    and     Loss    Account       is 
         prepared to estimate the net profit 
         or  net  loss  of  the  business  for  a 
         given accounting period.
         
           It  is  prepared after preparing the 
         trading Account.
         The Profit  and  Loss  Account  starts  with  the  credit 
          from the Trading Account in respect of gross profit or 
          debit if there is gross loss.
         Then all indirect expenses and losses are debited to 
          the Profit and Loss Account.
         It means that all those expenses or incomes which 
          have  not  been  debited  or  credited  to  the  Trading 
          Account are debited or credited in the Profit and Loss 
          Account.
         Indirect expenses include all administrative, selling 
          and  distribution  expenses  like  salaries,  rent  and 
          taxes,     postage,    and     stationery,    insurance, 
          depreciation,       interest   paid,    office   lighting, 
          advertising, packing, carriage outwards, etc.
         Losses include items like loss by fire, loss by theft, 
          etc.
     If there is any income and gain beside the  
      gross profit, it will also be transferred to 
      the credit of the Profit and Loss Account.
     If the total of the credit side exceeds the 
      total  of  the  debit  side,  the  difference 
      represent the net profit. 
     In  adverse  situation,  the  difference  will 
      represent the net loss.
     This net profit or net loss is transferred to 
      the capital account of the proprietor.
     The net profit increases the capital or nt 
      loss reduces the capital. 
                                 Format of Profit and Loss Account 
    Dr.                                                                                     Cr.
               Particulars              Amount(                Particulars              Amount(Rs.)
                                          Rs.)
   To  Gross  loss  transferred  from              By  Gross  Profit  transferred  from 
   Trading a/c                                     Trading a/c
   To management expenses:                         By interest received
   salaries                                        By discount received
   rent, rates and taxes                           By commission received
   stationery and printing charges                 By Income form investments
   Telephone expenses                              By apprenticeship premium
   legal charges and law costs                     By rent
   entertainment expenses                          By miscellaneous income
                                                   By  net  loss  transferred  to  capital 
   Insurance premium                               account
   general expenses
   Audit fees
                      Format of Profit and Loss Account contd.. 
           Particulars          Amount            Particulars          Amount(R
                                 (Rs.)                                     s.)
   To selling expenses :
   Advertising
   salesmen salaries
   Selling commission
   Brokerage
   travelling expenses
   Free samples
   Bad debts
   To Distribution expenses
   warehouse rent
   carriage outward
   warehouse insurance
   Packing expenses
   Delivery van expenses