Final answer:
The statement of profit and loss, also known as the income statement, is necessary according to the Conceptual Framework to provide information about a company's financial performance. It helps stakeholders assess profitability and make decisions. It shows revenues, expenses, and resulting profit or loss.
Step-by-step explanation:
The statement of profit and loss, also known as the income statement, is needed according to the Conceptual Framework in order to provide crucial information about a company's financial performance over a period of time. It shows the revenues generated, the expenses incurred, and the resulting profit or loss. This information is important for various stakeholders, including investors, creditors, and management, as it helps in assessing the company's profitability and making informed decisions.
For example, investors can use the statement of profit and loss to evaluate a company's past and current performance, which can guide their investment decisions. Creditors can assess the company's ability to generate profits and repay debts. Management can analyze the statement to identify areas of improvement and make strategic decisions to enhance profitability. In summary, the statement of profit and loss is necessary to provide a comprehensive view of a company's financial performance and is used by stakeholders to make informed decisions.