Question

Difference between Profit & Loss Account and Balance Sheet

25 Sep 2023
Answer :
Word Count : 380
Aspect Profit & Loss Account Balance Sheet
Purpose It shows the profitability of the business over a specific period (usually a year). It provides a snapshot of the company's financial position at a specific point in time.
Nature It is a nominal account. It is a real account.
Content It includes revenues, expenses, gains, and losses. It calculates net profit or loss. It comprises assets, __________ _____ ___ ____ ____ _______.
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Related Questions

From the following particulars of M/s PQR & Co., prepare a Three Column Cash Book

2022        
August 15 Cash in hand Rs 80,000  
“ 15 Balance in Bank Account Rs 4, 50,000  
“ 16 Cash Sales Rs 4.50,000  
“ 17 Purchased goods and issued cash Rs 3, 60,000  
“ 18 Received from Shyam 2, 00,000 in cheque, 2, 95,000 in cash in full settlement of
    account Rs 5,00,000
“ 20 Cash deposited in bank Rs 6, 10,000
“ 21 Paid Radhey Shyam by cheque, received account in full settlement of
    Rs 4, 00,000 Rs 3,95,000
“ 22 Received from Bhawana Rs 1, 79,000
“ 22 Discount Allowed Rs 1,000
“ 24 Cash withdrawn for office purpose Rs 1, 50,000
“ 25 Paid Raghu in Cash Rs 80,000
  Discount allowed by him Rs 20,000  
“ 26 Paid for stationery Rs 40,000  
“ 28 Deposited cash in Bank Rs 1, 80,000  
“ 30 Cash withdrawn from Bank for personal use Rs 60,000  

Secret Reserves

Prepare Trading and Profit and Loss account for the year ended 31st Dec, 2021 and Balance Sheet as on that date from the following Trial Balance:

Dr. (Rs) Cr. (Rs)
Capital   10,000
Cash 1,500  
Bank overdraft   2,000
Purchases and Sales 12,000 15,000
Returns 1,000 2,000
Establishment expenses 2,200  
Taxes and Insurance 500  
Bad debts and Prov. for bad debts 500 700
Debtors and Creditors 5,000 2,000
Commission   500
Deposits 4,000  
Opening stock 3,000  
Drawings 1,400  
Furniture 600  
BR and BP 3,000 2,500
Total 34,700 34,700

Adjustments:
1. Salaries Rs 100 and taxes Rs 200 are outstanding but insurance Rs 50 is prepaid.
2. Commission Rs 100 is received in advance for next year.
3. Depreciate furniture by 10%.
4. Bad debts provision is to be maintained at Rs 1000.
5. Interest Rs 210 is to be received on deposits and interest on Bank overdraft Rs 300 is to be paid.
6. Stock on 31st December 2021 was Rs 4500 

Difference between Profit & Loss Account and Balance Sheet

(i) Record the following transactions in Journal?

(ii) Post them into Ledger

April 1 Naresh Brothers commenced business with cash 15,000
” 2 Purchased furniture for cash 20,000
” 4 Purchased goods from Vijay & Co. 40,000
” 5 Sold goods 4,500
” 6 Paid rent 2,000
” 8 Sold goods to Arun Brothers 10,000
” 9 Arun Brothers returned goods 500
” 11 Bought goods from Rakesh & Co. 25,000
” 12 Returned goods to Rajesh & Co. 1,000
” 14 Paid for Advertising 2,000
” 15 Paid for Stationery 200
” 18 Drew for personal use 2,000
” 20 Cash Sales 9,000
” 21 Received from Arun Brothers 2,500
” 22 Paid to Vijay & Co. 13,000
” 25 Sold goods to Sugriv & Co. 15,000
” 26 Cash Sales 7,000
” 29 Paid Salaries 6,000
” 30 Paid Municipal taxes 1,000
” 30 Paid Printing Charges 2,000
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