The Features of Profit and Loss Account are as follows:
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Profit and loss account is a nominal account to be prepared at the end of the year. It includes transactions of revenue nature and does not contain items of capital nature.
- Incomes and Expenses relating to current year are to be shown in it.
- It includes outstanding expenses and accrued incomes relating to current year which are taken into consideration while prepaid expenses and incomes received in advance are excluded from it.
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It includes all expenses paid during the previous year but related to current year and all incomes received during the previous year but related to current year.