A REALLY DAFT QUESTION

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
If the P&L a/c is shown as a DEBIT ont the ETB, is it a profit or loss??<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    If the balancing figure is in your DR column it is a profit.<BR><BR>Hope that helps
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    No it isn't, it's a LOSS because "income is credited" to the P & L (transferred from sales T a/c), and "expenses are debited" if income is higher than expenses credit side bal b/d ie. net profit, if it's the reverse it's a loss.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    I agree with Eddy, in the trial balance the balancing figure for profit in the ETB is in the debit column of the p and l account and a credit in the balance sheet (as it is owed to the owner). In your example gaffern, the income is credited but the profit makes up the difference between income and expenses on the debit side so is therefore a profit i.e. there is more income than expenses.<BR><BR>Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    Im not sure but I think gaffarn is correct, because if its mentioned in ETB that the P&L account is DR so its already loss and liability in the B/s so its in the credit side.<BR><BR>if its in the CR side in the P&L a/c it is income (Profit), so it will be in the DR side in the B/S because it is an asset.<BR><BR>I will ask my assesor tomorrow to confirm it.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    A profit and loss b/f balance that is a debit balance is a loss as it has come from the balance sheet. the original question is whether the profit and loss on the etb is a profit or loss. I think everyone is right - just interpreting the question differently.<BR><BR>A p and l balance bought forward debit balance on the t account is a loss<BR>a p and l balance in the p and l column of the etb is a profit<BR>a p and l balance in the balance sheet column of the etb is a loss<BR><BR>I hope this clears it up (probably confuses more) can you clarify your question jhill?<BR><BR>Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    Its a PROFIT as for example: If when you make a sale there are no purchases you credit sales and debit profit. If your purchases are more than your sales you would have a credit balance in the P&L which would be a loss.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    A REALLY DAFT QUESTION

    I always looked at the ETB profit/loss column conundrum in a really easy way (perhaps too simply?) <BR><BR>On the left - Debit Credit - on the right (this is the same for any columns or accounts you have)<BR>On the left - Profit Loss - on the right (I just read it as it is!)<BR><BR>I wonder if anyone else sees it like this?<BR><BR>Katherine (a mere Intermediate student)

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