Profit And Loss Account(p/l acc)
Income And Expenditure Account(I/E acc)
1.Prepare by business undertakings(p/l acc)
Prepared by non-trading organizations(I/E acc)
2.Credit balance of this account is known as “Net profit” and added to opening capital(p/l acc)
Credit balance is known as “excess of income over expenditure or surplus” and added to opening capital fund(I/E acc)
3.Debit balance of this account is known as “ Net loss” and deducted from opening capital(p/l acc)
Debit balance is known as “excess of expenditure over income or deficit” and deducted from opening capital fund(I/E acc)
4.To check correctness of accounts, trial balance is prepared before preparing this Profit & Loss Account(p/l acc)
To check correctness of accounts, receipts and payment account is prepared before preparing this account(I/E acc)
Through P/L a/c we get Net profit or net loss of a concern
but incase of I/E a/c we get net surplus or net deficit of
the organigation as we prepare P/L a/c for a profitable
organigation & I/E a/c for a nonprofitable organigation.
the main diffarence between p/l a/c and income and
expenditure a/c is that p/l a/c prepare only for the
profitable concern like company and income expenditure a/c
prepare only for the non profit seeking concern like
charitable institution, club, hospital.
profit n loss is prepared to acheive the objectives of
While income n expenditure is prepared to ascertain the net
profit n loss, which is transferred to capital account at
the end of the financial year.