Why are adjustments in the profit and loss account necessary?
FINANCIAL
JAMB 2018
Why are adjustments in the profit and loss account necessary?
- A. To cover some expenses of the following year
- B. To show the provisions made during the year
- C. To show the total expenses paid and income received during the year
- D. To ascertain the actual expenses incurred and income earned during the year
Correct Answer: D. To ascertain the actual expenses incurred and income earned during the year
Explanation
Fundamental principle of preparing P&L account is that expenses and income relating to only the trading period are taken to the trading profit and loss account.
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