Question

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

• A. True
• B. False

Answer 1

The correct option is A True

This statement is true. In order to calculate the Profit and loss earned during a particular year, Profit and loss account is prepared. Debit side expenses are written and credit side income are written. If Credit side is greater than Debit side, it means income are more than expenses and balance shows net profit.