Summary Financial Accounting Notes on Final Account (Profit and Loss Statement Definition with Features and Objectives) for B.com / BBA / BS / ADP

FINAL ACCOUNT

Lecture # 06
Profit and Loss Statement

Profit and Loss Account: - Profit and Loss account show the net result (net profit or net loss)
of the business.


Profit and loss Account also known as Earning Statement / Earning Report /
Operating Statement / Income and Expense Statement / Statement of Comprehensive income


It is ascertained by deducting all indirect expenses (the expenses incurred for running
the business and selling the goods) from the gross profit.


Indirect Expenses: - The expenses incurred after the manufacturing of goods or sale of goods
and to operate the business is called indirect expenses. Indirect expenses also known as
operating expenses.


These expenses are classified into the following three groups:


1.   Office and Administrative Expenses
2.   Marketing, Selling and Distribution Expenses
3.   Financial and other expenses


Office and Administration Expenses: -


These are the expenses connected with the management of the business eg. Salaries of
manager, accountant and office clerks, office rent, office stationery, office electric charges,
office telephone ete.




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