*AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 49 :* 28.06.2020

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Profit & Loss of a Company: Part 1

Most Important Part of Company's Annual Report

 Profit & Loss Account :

Profit and Loss Account is an important financial statement which helps us to analyze the fundamentals of a company.Also known as Income Statement or Statement of Earnings, this statement gives details of the financial performance of an individual or organization over a particular period, which is normally a accounting year, i.e., its revenues, its expenses, tax, depreciation and profits. Profit Loss Account is like a moving video, which captures the profitability of a company for the financial year under consideration.

 It shows what the day to day operations of a business look like. It summarizes the money coming in and going out of a business. It provides information about a company's ability or inability to generate profit by increasing revenue, reducing costs or both.

 

Components of Profit and Loss Account of a Company:

 

Currently, all companies registered under Companies Acts have to prepare their Profit & Loss Account as per Schedule III of the Companies Act 2013.The basic components of Profit and Loss Account of a Company are tabulated below.

I shall explain all these components of Profit & Loss Account of a company in coming weeks.

 

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