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Question
Select the most appropriate alternative from those given below:
Credit balance of Profit and Loss A/c indicates _______ .
Select the most appropriate alternative from those given below:
Credit balance of Profit and Loss A/c indicates _______ .
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Solution
The correct option is C Net Profit
Net Profit is a profit which is generated by deducting all the indirect expenses from gross profit . Excess of income over expenditure in profit & loss account is called as net profit. Profit & Loss AccountParticulars Amount Particulars AmountTo Salary 10000 By Gross Profit 70000To Rent 35000 To Insurance 10000 To Indirect Expenses 10000To Net profit 5000 ------------- ---------------- 70000 70000 --------------- ------------------
Net Profit is a profit which is generated by deducting all the indirect expenses from gross profit . Excess of income over expenditure in profit & loss account is called as net profit.
Profit & Loss Account
Particulars Amount Particulars Amount
To Salary 10000 By Gross Profit 70000
To Rent 35000
To Insurance 10000
To Indirect Expenses 10000
To Net profit 5000
------------- ----------------
70000 70000
--------------- ------------------
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