Profit & Loss A/c is closed by transferring its balance to the _______________.

Trading A/c

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Manufacturing A/c

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Capital A/c

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Name of these

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Solution

The correct option is C Capital A/c
The balance of profit and loss account is transferred to the capital account whether it is profit or loss. Profit is added and loss is deducted from the capital. Its transferred to the capital account because the profit/loss is earned by the owner and it is earned because of the capital that they have invested in the business.

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Similar questions

Q. Which of these a/c is closed by transferring to debit side of Trading a/c?

Q. Which are the accounts which are not balanced but transferred to Trading A/c or Profit &loss A/c?

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

Q. Entry for transfer of Gross profit is :
Profit and Loss A/c Dr.
To Trading A/c

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