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Why should we prepare profit
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Answer Posted / arvind kumar jain
Actally Profit and loss appropriation account is prepared to
accertain the balance of net profit for distribution after
making due enteries of general reserve, proposed dividend,
partners salary, comm, interest and taxes like fbt....
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AT THE TIME OF REDEMPTION OF DEBENTURES. WHEN THERE IS PROFIT/LOSS ON SALE OF DEBENTURES WE TRANSFER THAT AMOUNT IN PROFIT AND LOSS A/C BUT WHEN WE CANCEL OUR DEBENTURES AFTER BUYING IT FROM OPEN MARKET THE DIFFERENCE BETWEEN MARKET VALUE AND COST OF DEBENTURES TRANSFER TO "CAPITAL RESERVE ACCOUNT .. WHY SO ANY PRACTICAL ANSWER ??
