Profit and loss account is prepared to determine the position of net profit or net loss.
All indirect expenses and all indirect incomes are treated in profit and loss account.
If direct income is less than direct expenses, than the difference is determined as gross loss.
Direct expenses and direct incomes are compared in trading account.
Direct expenses and factory expenses and direct incomes are treated in trading account.
Trading account ascertains the result of gross profit or gross loss.
Trading account, profit and loss account are the accounts and balanceisthe statement prepared under final account.
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