Planning of Profit and Loss Account

Planning of Profit and Loss Account

Rationalization of Particular items of Profit and Loss Account

1. Salaries

Salaries are paid out for the companies of workforce and are debited to revenue and loss ac- count staying oblique expenditure. If any income has been paid out to proprietor or associates, it should really be proven separately simply because it demands exclusive cure at the time of revenue tax assessment.

2. Salaries and Wages

When wages account is bundled with salaries it handled is as oblique expenditure and is taken into revenue and loss account.

three. Hire

Hire of the workplace shop showroom or godown is an oblique expenditure and so is debited to revenue & loss account. Nevertheless, lease of manufacturing facility is debited to trading account. When a aspect of the creating has been sublet the lease received should really be proven on the credit score aspect of revenue and loss account as a individual merchandise.

four. Rates and Taxes

These are levied by the community authorities to meet up with community expenditure. It staying an oblique expenditure is proven on the debit aspect of revenue and loss account.

five. Interest

Interest on bank loan, overdraft or overdue debts is payable by the agency. It is an oblique expenditure so debited to revenue and loss account. Interest on bank loan advanced by the agency on depositor investments is an revenue of the agency and so is credited to the revenue and loss account.

If business has paid out any interest on capital to its proprietor or associates it should really also be debited in the revenue and loss account but separately simply because this merchandise requires exclusive cure at the time of revenue-tax assessment.

six….



by