Question

Select the most appropriate alternative from those given below and rewrite the statement.

The gross profit is transferred to _________________ account.
a) trading
b) profit and loss
c) capital
d) current

Answer 1

The gross profit is transferred to Profit & Loss Account.

Explanation: The gross profit ascertained from the Trading Account is transferred to the Profit & Loss Account. This is because the figure of net profit is determined by deducting indirect expenses from the sum of gross profit and indirect incomes. Net profit of the firm is calculated by preparing Profit and Loss Account.