Advantages Of Profit And Loss Account

The main advantages of profit and loss account are as follows:

1.Profit and loss account gives the actual information about net profit or net loss of the business for an accounting period.

2. Profit and loss account gives the actual information about indirect expenses.

3. Profit and loss account serves to determine the ratio between net profit to sales.

4. Profit and loss account helps in determining the ratio between net profit to operating expenses.

5.Profit and loss account helps in controlling indirect expenses.