Profit and Loss account

A Profit and Loss account measures activity inside one fiscal year: what you sold, what you earned in interest, what you spent on rent, salaries or depreciation. Its balance grows from Shrawan 1 and is swept into Retained Earnings by the Period Closing Voucher after Ashadh end, so each year starts from zero and the Profit and Loss Statement shows that year alone. The IRD taxes the difference between these income and expense totals, so keeping them clean matters more than anywhere else. A common slip is paying a laptop through an expense account: it should be an asset depreciated over years, not a one-year cost, and the IRD will disallow the full deduction.

Net profit for the year = Sum of Income account balances - Sum of Expense account balances, both over one fiscal year.

1. 01Go to Accounts Setup > Chart of Accounts and open Office Rent; Report Type reads Profit and Loss.
2. 02Open Financial Reports > Profit and Loss Statement and set the fiscal year.
3. 03Each income and expense account appears with its total for that year only.
4. 04Switch to the earlier closed year: the same accounts show that year's figures, not a running total.
5. 05After the Period Closing Voucher, open Financial Reports > General Ledger for Retained Earnings to see the swept profit.

Read these on the Profit and Loss Statement; after closing, they start the new year at zero.

Every income and expense balance of FY 2082-2083 was swept into Retained Earnings by that year's Period Closing Voucher.