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Chapter 3

6.4 Balancing off a statement of profit or loss ledger account

The statement of profit or loss will contain any amounts relating to income (mainly
sales revenue) or expense accounts.

 At the end of an accounting period any amount that relates to the period is
transferred out of each income and expense account into another ledger
account called ‘the statement of profit or loss’.

 This is done to close the income or expense account for the period.

 Do not show a ‘balance c/f’ or ‘balance b/f’ but instead put the balancing figure
on the smallest side and label it ‘statement of profit or loss’. This shows that the
double entry is completed in the statement of profit or loss.

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