Profit & Loss Account (Income & Expense Statement) shows the calculation of Net Profit or Net Loss. Structure: Debit Side shows all expenses and losses; Credit Side shows incomes and gains. Format: Start with Gross Profit from Trading Account, add other incomes, deduct all operating and administrative expenses, calculate net profit/loss. Indirect expenses (included in P&L): Salaries, Rent, Rates & Taxes, Utilities, Advertising, Insurance, Depreciation, Bad Debts, Provision for Doubtful Debts, Stationery, Office Expenses, Commissions, Professional Fees, Interest on Loans. Other incomes: Commission Received, Interest on Investments, Dividend Income, Rent Received, Discount Received. Other expenses: Interest on Drawings, Interest on Loans, Discount Allowed, Loss on Sale of Assets. Calculation: Gross Profit + Other Incomes - Operating Expenses = Net Profit Before Exceptional Items. Exceptional/Non-Recurring Items are shown separately if applicable. Net Profit is transferred to Proprietor's Capital Account (or Drawings Account adjustment). Profit Margin = Net Profit / Sales × 100. The P&L Account shows profitability and efficiency in managing expenses. Exam tip: Distinguish between direct and indirect expenses correctly; master the structure and sequence of items; practice calculating net profit and analyzing margins.