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ACCOUNT
INCOME EXPENDITURE
BALANCE
SHEET P & L A/C
P & L A/c CONCEPTS
ACCOUNTING PERIOD
– Expenditure during A/c period which are
also expenses of that period. –
– Expenditure during the A/c period which
will become expense only in future periods
– Expenditure during the previous A/c period
which will become expenses during the
current A/c period
– Expense of the current A/c period which
have not yet been paid
The Accounting Time Period
Companies also prepare statements
for interim periods, generally on a
quarterly or monthly basis.
P & L A/c CONCEPTS (contd.)
REALIZATION CONCEPT
– ‘point of time’ or revenues earned
– recognition of revenues
ACCRUAL CONCEPT
– profits are measured by change in Owners’ equity
– revenues increases OE, expenses decreases OE
Yeah, that’s
easy for you to
say!