State whether the following statement are True or False.

Credit balance of profit and loss account shows net profit of the business.

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Solution

True

Explanation: The balance of the Profit & Loss Account is the net profit when the credit side of this account exceeds its debit side. This net profit is added to the capital of the proprietor appearing in the Balance Sheet.

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Similar questions

Q. State whether the following statements are True or False:
Credit balance of profit and loss account shows net profit.

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. State whether the following statement are True or False.

Debit balance of Trading account shows gross profit.

Q. Objective Type Questions :
State whether following statements are true or false :

Net profit shows quick ratio.

Q. State whether the following statements are True or False.

Capital account always shows credit balance.

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State whether the following statement are True or False. Credit balance of profit and loss account shows net profit of the business.

True Explanation: The balance of the Profit & Loss Account is the net profit when the credit side of this account exceeds its debit side. This net profit is added to the capital of the proprietor appearing in the Balance Sheet.

State whether the following statement are True or False.

Credit balance of profit and loss account shows net profit of the business.

True

Explanation: The balance of the Profit & Loss Account is the net profit when the credit side of this account exceeds its debit side. This net profit is added to the capital of the proprietor appearing in the Balance Sheet.