Income Statement

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Income Statement is also known as Profit and Loss Account, which is prepared to calculate the net profit or net loss of the business for a given accounting period.

The Profit and Loss account starts with the credit from the trading or manufacturing account in respect of gross profit or from debit side if it’s a gross loss. The accounts or indirect expenses or losses that have not been debited to trading account are debited to the Profit and Loss Account.

Indirect expenses include all administrative, selling and distribution expenses like salaries, rent, taxes, postage, stationary, insurance depreciation, interest paid, advertising etc.  Losses and expenses like loss by fire or theft. The difference of the two sides of the account is either net profit or net loss.

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