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Accounts for individual professionals

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Is a P&L Account or Income and Expenditure acccount prepared for an individual professional? Please give resons for the answers!!!!!!!

Replies (3)

Yes sure, why not. just keep in mind the separate entity concept. That means keep the personal transactions out of the books, except those via a vis the profession, such as drawings or investments. It's good to have fin stat prepared for individual irrespective of business and prof.

P/L A/c is prepared by Traders/Manufacturers. Profit & Loss A/c is maintained by someone whose main business is to earn profits which is done by selling goods and adjusting purchase cost and other expenses necessarily incurred for selling goods or promoting to sale goods. On the other hand, Income & Expenditure A/c is maintained by the persons who are engaged in profession and whose main motive is to give advise or consultancy to others. Their primary objective is the welfare of society. The income earned by such professionals(doctors, CAs, Teachers, Lawyers etc.) is usually called 'fees' and not profit. They are not involved in purchasing & selling of goods.

Yes it will be maintained because see in income tax act one of the head is income from busines or profession. Even profession have to go under audit and also its a prudance to keep books of account

 

If your question is which accout to maintain that is wether incomeand ependiture or p and l then it is income and expeniture.


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