Question

Select the most appropriate alternatives from those given below

All items of income are shown on the credit side of the __________ Account..
a) Balance Sheet
b) Profit & Loss
c) Manufacturing
d) None of them

Answer 1

All items of income are shown on the credit side of the Profit and Loss Account.

Explanation:
All accounts of expenses and incomes are classified as nominal accounts and according to the rule of nominal account, all expenses should be debited and all incomes should be credited. Thus, all the items of income are shown on the credit side of the Profit & Loss Account as the nominal accounts balances are transferred to the Trading and Profit & Loss A/c.