Why is Profit and Loss Adjustment Account prepared? Explain.

Q: Describe the accounting for actuarial gains and losses

A: Actuarial Gains and losses arises due to the difference in the pension payment made by the employer…

Q: The income statement is a change statement. Explain what is meant by this

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Why is the income statement called the "profit and loss statement"?

A: Income Statement is called the profit and loss statement because it records all the incomes and…

Q: What is the fees earned and net income of this income statement?

A: Net income is the excess of revenue over expenses. Net income is calculated under income statement…

Q: Which one of the following does not appear in the profit and loss account?

A: Cash: Cash is the money which is readily available in the form of currency. Since cash can be easily…

Q: What will be the result of prepayment of rent expense in adjusting entry?

A: The prepayment of rent expense is an asset for the company because this payment is made with respect…

Q: From the above information, prepare a detailed statement of profit or loss for internal use, and a…

A: Profit and loss Account The purpose of preparing the profit and loss account to know the actual net…

Q: How to complete income statements?

A: The income statement summarises a company's sales, costs, and profits or losses. This is one of…

Q: What is an accrued expense? Provide an example.

A: Accrued expense: This is the expense incurred but not yet paid. It is treated as liability until the…

Q: What is an income summary account? Why it is needed?

A: Income summary accountIncome summary account is a temporary account primarily used for specific…

Q: Why must one understand accrual basis accounting and how does this process play a huge role in the…

A: Accrual accounting concept explain that expenses and revenues should be recorded in the books when…

Q: Which of the following best describes revenue?

A: In simple accounting term revenue is the amount which company earn by selling goods or providing…

Q: What is an income statement, and what information doesit provide?

A: A financial statement that comprises of all the records of money received as revenue and spent as…

Q: how to do a income statement?

A: Income statement: The income statement is one of the vital reports showing the performance of the…

Q: What is a prepaid expense and where is it reported in the financial statements?

A: Prepaid expense:   Prepaid expenses are any expenses that is paid before it becomes due. A prepaid…

Q: What is the relationship between Income Measurement and Asset Valua

A: Profit or loss calculation is a simplified method of calculating income. An accountant defines…

Q: How can we determine the net income from operations and then adjust the net income?

A:

Q: Explain profit-and-loss statement?

A: For financial reporting, there are three major financial statements which a business entity is…

Q: What are restructuring costs and where are they reported in the income statement?

A: Definition: Income statement: The financial statement which reports revenues and expenses from…

Q: How to calculate revenue?

A: Money earned by selling products produced or purchased is called sales revenue. Ideally revenue is…

Q: How to calculate or compute the operating income and the net income

A: Operating Income: Income generated from the business operation is called operating income. In simple…

Q: Which of the following journals would correctly post an adjustment for deferred (prepaid) income?…

A: The journal entries are prepared to keep the record of day to day transactions of the business on…

Q: When is Profit and Loss Account made? Why?

A: Profit and loss account: profit and loss account also called an income statement. Every business…

Q: Explain how adjustments affect financial results.

A: Accounting systems are designed to record most recurring daily transactions, particularly any…

Q: Explain clearly how would you read a Balance Sheet and the statement of Profit and Loss.

A: Balance sheet and statement of profit and loss are the financial statements of a company. The…

Q: State the meaning of Income and Expenditure Account.

A: Accounting:   It refers to the process of recording the financial transactions of an organization…

Q: how to make an income statement.

A: A statement which is prepared to know how well the company is performing and to ascertain the…

Q: How does accounting rate of return (ARR) differ from the internal rate ofreturn (IRR)?

A: Introduction: Capital budgeting is an investment criterion or decision making mechanism for…

Q: What is an accrued revenue? Provide an example.

A: Revenue refers to the income that is received by a business from its business operations and…

Q: Why are adjusting entries necessary under accrual-basis accounting?

A: The accrual basis of accounting states that expenses are matched with the related revenues . And are…

Q: Distinguish between operating income and net income?

A: The main purpose of carrying on business operation is earning profits or income. It is the incentive…

Q: Is depreciation expense closed? If so, is it closed to income summary like the other expense…

A: Depreciation Expenses It's crucial to think about how long assets will keep worth as well as how to…

Q: How to balance income statement?

A: Financial statements refers to formal recording of financial position, performance, and financial…

Q: Do adjusting entries affect income statement accounts, bal-ance sheet accounts, or both? Explain.

A:

Q: Measurement of income method consists of what exactly?

A: There are three methods of measurement of National Income. These are:  1. Product Method  2. Income…

Q: How is the Income Summary account used? Is it a temporary or permanent account?

A: Income summary is an account which is prepared for closing accounts. It is prepared at the end of…

Q: Why is depreciation on the income statement different from the depreciation on the balance sheet?

A: Depreciation is the reduction in the value of asset during a period of time due to wear and tear.…

Q: How is net income calculated? Define revenues and expenses?

A: Formula to calculate net income :Net income = Sales revenue + Interest revenue - (Total expenses +…

Q: What is the major distinction (a) between revenues and gains and (b) between expenses and losses?

A: The major distinction between revenues and gains (or expenses and losses) depends on the typical…

Q: Explain the purpose of income statement.

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Identify the uses and limitations of an income statement.

A: