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Uses of Trading Profit and Loss Account

1. To show the profit of an organization

2. For Comparison with other years

3. For Income Tax assessment

4. For management purpose

Differences between Trading Account and Profit and Loss Account

Trading AccountProfit and Loss Account
1.Balance shows gross profit or lossBalance shows net profit or loss
2.Balance will be transferred to profit and loss account.Balance will be transferred to capital account in Balance sheet.
3.Charged with cost used in getting goods into saleable condition.Include all relevant expenses of revenue nature.

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