"INCOME STATEMENT (PROFIT AND LOSS ACCOUNT)INCOME STATEMENT (PROFIT AND LOSS ACCOUNT):-Now aday’s company to prepare income statement in the books of financial accounting to get netprofit or net loss…so students I clearly explain income statement smart way go through entiredocument income statement concept is very easy just we find expenses items and incomes and gainstimes ..Incomes and shows credit column expenses in debit column when we prepare incomestatement if credit column incomes and gains more than debit column expense its shows net profit. Ifdebit column expenses amt is more than credit column incomes and gains we get loss… ASSIGNMENT:-- STUDENTS BASED ON INCOMESTATEMENT CONCEPT TO COMPLETE ASSIGNMENT 1. Prepare a Trading & Income Statement (profit and loss account) of Google from the followingbalances Year ended 31-12-2017 USD$ STOCK (1-1-2017) –8430$PURCHASES - --5740 $PRDUCTIVE WAGES -3470$SALES -- 16490$CARRIAGE -- 1430$MARINE INSURANCE --170$IMPORT DUTY-- 650$ SALARIES--140$RENT --200$SUNDRY EXPENSES --- 150$STOCK(31-12-2017)--- 5390$ANSWERS:-GROSS PROFIT :1990$TOTAL TRADINGAMOUNT: 21,880$NET PROFIT :- 1500$TOTALINCOMESTATEMENT ( PROFIT& LOS ACCOUNT) TOTAL :-1990$Q. Why we prepae income statement(profit and loss account) in the books of Financial Accountscompany what the benift to prepare income statement in the books ofFinancial Accounts?ANS:-Company to prepare income statement(profit and loss account) in the books of Accounts to getnet profit or net loss IMPORTANCE OF INCOME STATEMENT (PROFIT AND LOSS A/C)? 1. The Main purpose in preparing the profit and loss A/c to ascertain Net profit andnet loss of a firm for a specific period.? 2. The income statement (profit and loss a/c) is also useful to establish a relationshipbetween the sales and the to all indirect expenses through percentages. ? 3. We can prepare a net profit ratio and an operating profit ratio and thereby wecan analyze the trend in profit earning.? 4. Preparation of the profit and loss a/c is very much useful to compare the actualexpenses with the Standards already set. This is much useful to analye the positiveand the negative variances.? 5. sometimes the trading concerns are forced to keep reserves, funds and otherprovisions for future Contingencies. This allocation is not possible unless weprepare the p&l and finalize the net profit.Income statement (profit and loss account ) Concept:-income statement (profit and loss account) is a nominal Account.Nominal Account Golden principle or principle of accounts: Debit all expenses and loses Credit all incomes and gainsExplanation:-Income statement (profit and loss account) is a nominal Account & should not have any openingbalance or closing balance…The account started either with Gross profit and gross loss and the tradingand non trading incomes are credited on this account..Similarly all the administrative, general, selling And distribution expenses andother non trading losses, maintenance and financial charges, writingdown of asset values are to be profit &loss account…If the Total of the credit Column exceeds thetotal of debit column the difference is called net profit. Which is to be transferred to the capital A/c?If the total of the debit Column exceeds the total of credit Column the difference I net loss which isdeducted from the capital in the balance sheet… Smart Explanation:-Income statement nothing but a profit and loss account having expenses & incomes & gains..Incomes and gains we treat credit column expenses we treat debit column …if we want get profit Credit column amt is more than debit column.. if we get loss…debit column amount should be morethan credit column incomes and gains should be less…then we get netloss…net profit or net losstransfer to balance sheet ..if we get net loss capital item treat less…if net profit transferincomestatement to balance sheet capital item treats add net profit …INCOME STATEMENT ITEMS LIST :-ITEMS ON DEBIT SIDE (EXPENSES):-General Administrative Expenses :-? 1.salaries? 2.Rent,Rates and Taxes? 3.postage,printing &stationary? 4.legar charges? 5.Audit Fees? 6.Telephone Charges? 7.Electricity Charges ? 8.insuranceSELLING & DISTRIBUTION EXPENSES? 1.Salary to sales staff? 2.Travel Expenses? 3.Advertisements? 4.Commision and Brokerage? 5.Carriage outward? 6.Commision on sales? 7.packing Charges? 8.Godown Expenses? 9.Free Samples? 10.Van Expenses? 11.Trade ExpensesMAINTENANCE EXPENSES & FINANCIAL CHARGES? 1.interest on capital? 2.interest? 3.discount Allowed "