Question

Entry for transfer of gross loss is -
Trading A/c Dr.
To Profit and Loss A/c

• A. True
• B. False

Answer 1

The correct option is B False

The given journal entry to transfer gross loss is wrong because the trading account which had to be credited is debited and profit & loss account which had to be debited is credited.

Debiting an item means reduction of amount and crediting means increase in amount.

Trading account is to be credited because gross loss when taken out from this accont raises the balance whereas profit & loss account is to be debited because gross loss reduces the balance of this account.

The correct journal entry would be:

Profit and Loss A/c Dr.

To Trading a/c.