Statement I The profit and loss account shows the financial results of the concernfor a period.
Statement II In profit and loss account, indirect expenses are charged against the gross profit.
A. Both statements are correct
B. Both statements are incorrect
C. Statement I is correct, but statement II is incorrect
D. Statement I is incorrect, but statement II is correct
Answer: Option B
This Question Belongs to Commerce >> Accounting
The correct answer is: A. Both statements are correct
Explanation:
Statement I:
✔ Correct — The Profit and Loss Account shows the financial performance (profit or loss) of a business for a specific accounting period.
Statement II:
✔ Correct — In the Profit and Loss Account, indirect expenses (such as administrative, selling, and distribution expenses) are deducted from gross profit to arrive at net profit.