... as a source of funds for the company to use. This retained profit may be used to buy fixed assets (machinery, equipment etc.) or it may remain as current assets (cash in the bank perhaps). The purpose of the profit and loss account is so that business owners can see how much profit they have made at the end of the trading year. The size of the profit may be a guide to the performance of the business. The limitations of the profit and loss account are that the accounts can't be used to show what is going to happen in the future. Also stakeholders who are very interested in the accounts must be aware that it is possible to disguise or manipulate financial information in the accounts. For example a business may attempt to hide its profits to reduce tax or to deter a potential takeover. Furthermore a business may try ...

See this essay or coursework document in full right now