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Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter 8
Financial Statements I
Profit & Loss Account
It is debited with all expenses and losses (indirect expenses) and credited with all incomes and gains (indirect incomes), which are not taken in the trading account.
If the income exceeds the expenses, it shows a Net Profit, otherwise, it shows a Net Loss.
Profit & Loss Account is prepared to find out the Net Profit earned or Net Loss incurred by a business during an accounting period.
Proforma of a Trading and Profit & Loss Account
Amt.
Particulars
Amt.
Particulars
Trading and Profit & Loss Account for the year ended ...........
Opening Stock
XXX
Purchases XXXX
Less P.Returns XX
XXX
Wages
XXX
Carriage Inwards
XXX
Fuel, Factory Rent etc..
XXX
Import Duty
XXX
Clearing Charges
XXX
Other manufacturing exp.
XXX
Sales XXXX
Less S.Return XX
XXX
Closing Stock
XXX
XXXX
XXXX
Gross Profit c/d
XXX
Gross Loss c/d
XXX
Salary
Discount Allowed
XXX
Bad debt
XXX
Carriage outwards
XXX
Stationery and printing
XXX
Travelling expenses
XXX
Commission paid
XXX
XXX
Rent received
XXX
Commission received
XXX
XXXX
XXXX
Gross Profit b/d
XXX
Gross Loss b/d
XXX
XXX
Discount received
XXX
Interest received
XXX
Rent
XXX
Interest
XXX
Depreciation
XXX
Bad debts recovered
XXX
Net Profit (transferred to capital account )
XXX
Net Loss (transferred to capital account)
XXX
Amt.
Particulars
Amt.
Particulars
Trading and Profit & Loss Account for the year ended ...........
Opening Stock
XXX
Purchases XXXX
Less P.Returns XX
XXX
Wages
XXX
Carriage Inwards
XXX
Fuel, Factory Rent etc..
XXX
Import Duty
XXX
Clearing Charges
XXX
Other manufacturing exp.
XXX
Sales XXXX
Less S.Return XX
XXX
Closing Stock
XXX
XXXX
XXXX
Gross Profit c/d
XXX
Gross Loss c/d
XXX
Office and Administrative Expenses
Selling and Distribution Expenses
Miscellaneous Expenses
Indirect Expense
Indirect Income
Profit on sale of investment
XXX
Loss on sale of furniture
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT
Following balance is extracted from the books of a trader ascertain gross profit, operating profit and net profit for the year ended March 31, 2026.
Sales 75250
Purchases 32250
Opening stock 7600
Sales return 1250
Purchases return 250
Rent 300
Stationery and printing 250
Salaries 3000
Misc. expenses 200
Travelling expenses 500
Interest 1800
Commission paid 150
Office expenses 1600
Wages 2600
Profit on sale of investment 500
Depreciation 800
Dividend on investment 2500
Loss on sale of old furniture 300
Closing stock (March 31, 2026) valued at Rs. 8000
illustration
Amt.
Particulars
Amt.
Particulars
Trading And Profit & Loss Account
For the year ended March 31, 2020
82000
Gross Profit c/d
Gross Profit b/d
7600
Purchases
32250
Less P.Return
250
32000
Sales
75250
Less S.Return
1250
74000
Opening Stock
Closing Stock
8000
Wages
2600
82000
39800
39800
Sales 75250
Purchases 32250
Opening stock 7600
Sales return 1250
Purchases return 250
Wages 2600
Closing stock 8000
Amt.
Particulars
Amt.
Particulars
Trading And Profit & Loss Account
For the year ended March 31, 2020
82000
Gross Profit c/d
Gross Profit b/d
7600
Purchases
32250
Less P.Return
250
32000
Sales
75250
Less S.Return
1250
74000
Opening Stock
Closing Stock
8000
Wages
2600
82000
39800
39800
Rent
300
Stationery and Printing
250
Salaries
3000
Profit on sale of investment
500
42800
42800
Net Profit
(transferred to capital A/c)
33900
Rent 300
Stationery and printing 250
Salaries 3000
Misc. expenses 200
Travelling expenses 500
Interest 1800
Commission paid 150
Office expenses 1600
Profit on sale of investment 500
Depreciation 800
Dividend on investment 2500
Loss on sale of old furniture 300
Misc. expenses
200
Travelling expenses
500
Interest
1800
Commission paid
150
Office expenses
1600
Depreciation
800
Loss on sale of furniture
300
Dividend on investment
2500
Operating Profit (EBIT – Earnings Before Interest and Tax)
It is the profit earned through the normal operations and activities of the business. Operating profit is the excess of operating revenue over operating expenses.
Operating profit is profit before interest and tax (EBIT). Abnormal items such as loss by fire, etc. are also not taken into account. It is calculated as follows:
Operating profit = Net Profit + Non Operating Expenses
– Non Operating Incomes
Calculation Operating Profit
Operating profit
= Net Profit + Non Operating Exp.
– Non Operating Inc.
Amt.
Particulars
Amt.
Particulars
Trading And Profit & Loss Account
For the year ended March 31, 2020
82000
Gross Profit c/d
Gross Profit b/d
7600
Purchases
32250
Less P.Return
250
32000
Sales
75250
Less S.Return
1250
74000
Opening Stock
Closing Stock
8000
Wages
2600
82000
39800
39800
Rent
300
Stationery and Printing
250
Salaries
3000
Profit on sale of investment
500
42800
42800
Net Profit
(transferred to capital A/c)
33900
Misc. expenses
200
Travelling expenses
500
Interest
1800
Commission paid
150
Office expenses
1600
Depreciation
800
Loss on sale of furniture
300
Dividend on investment
2500
= 33900 + 1800 + 300 – 500 – 2500
= 33000
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT