profit AND loss

since all incomes are profits and all expenses are losses we use profit and loss

Ya..

The normal and common understanding is that the Profit & Loss account is actually a STATEMENT recording various incomes (profits) and expenses (losses) during the year... Its not about the ultimate result, but the incomes/expenses during the year.... Yes, it would have either recorded only incomes or expenses only, then may be we might have called the same as PROFITS OR LOSSES ACCOUNT.....

But as such, i know this is not satisfying answer as its just one's understanding, not satisfying even for me myself... I would look forward for some genuine answer

one answer could be to maintain consistency as it wont be sensible some companies giving profit a/c and some loss a/c

n other could be that in profit prior to incorporation v can get both loss and profit

thanks for replying but still even m searching for proper ans  

Its because we record the profits or losses for each and every individual transaction and do take the whole as such. Each and every transaction needn't end up with only profit nor loss. Hence it may be either of them. Since we look at each and every individual transaction, we call it as profit and loss account than profit or loss account.

rgds

Parag P Shah

Dhiraj ur answer is convincing. Profit & Loss A/c. is a statement recording Incomes and Losses / Expenses.

To assert my point further, consider the accounts of Professionals where it is called "Income & Expenditure A/c." Even in that case we have either Excess of Income over Expenditure or vice versa as the end result, but not both.

Therefore the word "and" is used in Profit & Loss A/c. to signify both Incomes and Expenses. 

Argument put up by Sneha about consistency is also acceptable.

BUT I must say........such good arguments may not also click when facing an interview. Hope this discussion can help someone in future.

So far we are following some traditions in the accounting.  

To use the words for determination of  financial results - Profit & Loss a/c are required by the Companies Act, 1956. This is the heading prescribed by the law.

As the new developments are going on; in IFRS we will use INCOME STATEMENT. Income might be positive or negative.

dear sneha... profit and loss a/c  term is given by law...its not made by us....we are following language of law.... hence dnt bother by wt name its called.... and there is one reason we usally records sum profit as wel as sum losses in p&l a/c ..... this is not related to ultimate profit or loss earned by companies so thats why its a profit and loss a/c..................................but now as per latest IFRS conversion  p&l a/c will be known as comprihensive income statement....

ALL D BEST

Well said Surendra Sir.........Thank you.

Nice Question, Profit and loss A/c refers to the mixture A/c of profit A/c and loss a/c. If we use the term Profit or loss a/c then we have to prepare profit a/c, loss a/c seperately.

As per General clauses Act .. the term profit includes losses also... so if an accountant wants to knw business performance as on date, he s not aware of the end result. As profit includes losses , we write Profit and Loss A/c.

since profit includes losses, that is also the reason we write Profit And loss Appropriation A/c. At the end if we get profit(loss) we wil make transfer to repective parties or to some heads of A/c.

Really nice question... In our Professional life we prepare atleast a Profit & Loss A/c daily but very few are known of this. Very satisfactory answer given by sudarshan sir. thanx sir. And also thanx to Sneha, who gave us a nice question...

i agree to Mr. Manish if we use proffit or Loss a/c then we have to prepare Proffit a/c, Loss a/c............. & i can/t use in B/s in proffit or loss a/c there sould be either proffit a/c or Loss a/c