Debit balance in the profit and loss account is a profit. Comment.

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Solution

Debit balance in the profit and loss account is a loss because expenses are more than revenue.

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Similar questions

Q. The debit balance in the Profit & Loss Account is ___________.

A and B are partners sharing profits and losses in the ratio of 2:1. From April 1, 2017, they decided to share the profits in the ratio of 3:2. On that date, profit and loss account showed a debit balance or Rs 60,000. Record the necessary journal entry for the distribution of the balance in the Profit and Loss Account.

Q. Objective Questions :
Answer in one Sentence :

How is a debit balance of profit and loss account dealt with on death of a partner?

State whether the following statement are true or false.

1. Final Accounts are prepared on the basis of Trial Balance.
2. Trading Account is a part of Profit & Loss Account.
3. Profit Loss Account is prepared to find out Gross Profit or Gross Loss.
4. Gross Profit or Gross Loss is transferred to Balance Sheet.
5. An amount of net profit is added to the capital.
6. All indirect expenses are debited to trading account.
7. Balance Sheet is a statement and not an account.
8. Capital account is a personal account.
9. Amount of prepaid expenses appears on assets side.
10. Bank Overdraft is a liability of business concern.

Q. Kamal and vimal were partners in a firm sharing profits in the ratio of 3:2. Ghosh was admitted as a new partner for

\frac{1}{5} t h

share in the profits.
On Ghosh's admission the Balance Sheet of the firm showed a credit balance of

R s 10, 000

in its Profit and Loss Account which was debited by the accountant of the accounts of kamal and Vimal. Did the accountant give correct treatment to the balance of Profit and Loss Account ? If 'yes' give the reason and i 'not' give the correct treatment.

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