What is meant by closing balance of p/l a/c Does it include past years profit as well - Accountancy - Cash Flow Statement

Question

What is meant by closing balance of p/l a/c ? Does it include past
years profit as well?

Neha Chopra · Accepted Answer

Dear Student

Closing balance of profit and loss account is the balance which is
left over after any appropriation or transfer to reserves
Yes, It may include the leftover balance of previous years profit
as well
i e Suppose Current Year profit = 1,00,000/-
Opening balance of profit and loss account = 2,00,000/-
Transfer to Reserves = 75,000/-

Therefore closing balance of profit and loss account = Opening +
Current year profit - Transfer = 2,25,000/-
Hence it included previous years profit as well

Regards

What is meant by closing balance of p/l a/c ? Does it include past years profit as well?