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Question

Gross profit or gross loss revealed by trading account is transferred to:

A
Balance Sheet
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B
Profit and Loss Account
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C
Manufacturing Account
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D
Profit and Loss Appropriation Account
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Solution

The correct option is B Profit and Loss Account
Profit and loss account calculate net profit or net loss. It takes into account operating and non operating expenses and revenues, during an accounting period. It is prepared after the trading account. The balance of trading account i.e. gross profit or gross loss is transferred to this account which acts as initial point of this account.

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