Question

Name and explain the accounts involved in Accounts Group Profit and Loss Account.

Accepted Answer

Accounts involved in Accounts Group ‘Profit and Loss Account’ are: (i) Sales Account: For different sales accounts, the segregation is based on tax slabs ot types of sales. This also becomes a simple mechanism for preparation of tax returns. Sales account may be classified in groups such as domestic sales, export sales etc. of even sales returns account may be opened. (ii) Purchase Account: This is similar to sales accounts, except for the purpose of the transactions. (iii) Direct Income: [Income Direct]: All trade income accounts fall under sales accounts. This group may be used for accounts like servicing contract charges that follow after the sales of equipment. (iv) Indirect Income ( Income Indirect): These are the miscellaneous non-sale income accounts, e.g. rent received and interest received. (v) Direct Expenses ( Expenses Direct): These accounts determine the Gross Profit of the company. (vi) Indirect Expenses (Expenses Indirect): These include all other administrative, selling or non- direct expenses.

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