Question

Select the most appropriate alternative from those given below:
Debit balance of Trading Account means _________ .

• A. Gross Loss
• B. Net Loss
• C. Net Profit
• D. Gross Profit

Answer 1

The correct option is A Gross Loss

Trading account is prepared to know the profit earned by the firm through the trading activity. Trading account is prepared by considering only direct expenses. Gross Profit depicts the direct profit earned by the firm through trading of goods.

Trading Account

Particulars Amount Particulars Amount

To Opening Stock 10000 By Sales 30000

To Purchases 30000 By Closing Stock 10000

To Wages 5000 By Gross Loss 10000

To Direct Expenses 5000

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50000 50000

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Excess of debit (Expenses) over credit (Income) is gross loss.