The Features of Profit and Loss Account are as follows:
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.
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.