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Answer» Objectives of Profit and Loss Account are as under: - The Profit and Loss Account Is prepared to ascertain the Net Profit and Net Loss incurred during the accounting period.
- Excess total of credit side of Profit and Loss Account Is called Net profit.
- Excess total of debit side of Profit and Loss Account is called Net loss.
- The capital of the owner will be increased by Net profit.
- The capital of the owner will be decreased by Net loss.
- Indirect expenses, like as administrative expenses, selling and distribution expenses, financial expenses and other expenses and losses can be known from the Profit and Loss Account.
- Other incomes and benefits of the business can be known from the Profit and Loss Account.
- By comparing the Net profit or Net loss proportion with the past results of the business, the development of the business can be known.
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