Question

Profit and Loss Account is prepared to know __________.

• A. Net profit
• B. Gross profit
• C. Both A and B
• D. None of the above

Answer 1

The correct option is A Net profit

Profit and Loss Account is prepared to find out the net profit earned by the business from its operations. This includes a credit of gross profit and other income received and debit of all indirect expenses.

Profit & Loss Account

Particulars Amount Particulars Amount

To Rent By Gross Profit c/f

To Electricity By Dividend received

To Insurance

To Salary

To Interest

To Depreciation

To Employee Welfare

To Indirect exp (Others)

To Net Profit

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