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Importance of profit and loss account

Answer Text:
Importance of profit and loss account.
- It enumerates the expenses incurred by a business over a particular trading period.
- It helps the business to determine its net profit or net loss.
- It is used by managers when making decisions on how the business will be run.
- It helps the government to calculate the tax payable by the business
- By comparing different trading periods, it is used to measure the performance of the business.
- It is needed when the business wants to obtain loans from banks and other financial institutions.