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Question

Excess of credit over debit in Profit and Loss A/c indicates ________.

A
Net Profit
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B
Gross Profit
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C
Gross Loss
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D
Net Loss
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Solution

The correct option is A Net Profit
Profit and loss account is prepared to know the profitability of the firm. All the indirect expense are debited and indirect income are credited to find out the net profit.

Excess of credit (Income) over debit (Expense) indicates net profit of the firm.

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