This account are those purely for internal use by the company. The trading account of a limited company is no different from that of a sole trader or of a partnership. The profit and loss account also follows the same pattern as those of partnerships or sole trader except for some types of expenses, which is peculiar to limited, companies The two main expenses under this heading are thus:
(a) Director’s remuneration: This is obvious, since only in companies are directors found.
(b) Debenture interest: The term debenture is used when money is received on loan to the company and written acknowledgement is given, usually under seal. Thus, a loan to a partnership is known as loan, while usually a loan to’ a company is known as a debenture.
The interest payable for the use of the money is an expense of the company and is payable whether profits are made or not. This means that debenture interest is charged as an expense in the profit and, loss account itself