What is the difference between trading account and profit and loss account?

Answer 1

expenditure is the amount of money spent on a weekly or monthly basis.

income is the financial gain (earned or unearned) over a given period of time.

a profit and loss account is an account compiled at the end of an accounting period to show gross and net profit or loss

Answer 2

A profit and loss account itemises the income and expenditure of a business in a given period, say a year. This gives an indication of how well the business is trading. The Balance Sheet itemises the company's assets and debts at a particular moment in time, say the end of a trading year. This gives an indication of whether the company is solvent. If the company's debts outweigh the assets then it may need to consider winding up unless the people to whom the debts are payable indicate their willingness to wait for payment.

Answer 3

Profit and loss appropriation account shows the distribution of net profit amongst the shareholders in the form of dividend and transfer of profit to various reserves and issue of bonus share. profit and loss appropriation account is prepared after the preparation of profit and loss account. Profit and loss account provides the information about adjustment relating to last year. Profit and loss appropriation account also provides the information about the appropriation of dividend out of available profit. Profit and loss appropriation account is prepared after profit and loss account and before the preparation of balance sheet. Profit and loss appropriation account is a vital item of final account

Answer 4

Trading account only records the revenue and corresponding direct expenses related to that revenues while profit and loss accounts records the indirect expenses to run day to day tasks of business.

Answer 5

profit is the balance when you pay all of the expenses the remainder that is left is the profit. and loss is when the expenses are greater than revenue means that the revenue is less and the expenses are more so when you subtract revenue from the expenses the result will be minus that is called loss E.g; 400 revenue - 800 expenses= -400 this is called net loss. income is the amount of revenue you received and expenditure is all the expenses you are going to pay whether it is purchasing or to such as buying equipment or paying utilities like water and electricity

wrote by Abdinasir Ahmed Jimale

Student of undergraduate İnternational Trade And management at İstanbul Şehir University. short005@hotmail.com

Answer 6

Profit and loss account shows current fiscal year's income and expenses while balance sheet shows the performance of business from starting day of business to till date.